What is an LLC?
An LLC, which stands for limited liability company, is one of the most popular types of business entities because of its ease in formation. In general, the members of an LLC are not held personally liable for the debts and liabilities of the company. An LLC is formed upon filing Articles of Organization with the Ohio Secretary of State’s Office. Upon filing, your LLC is registered to do business in the State of Ohio. However, depending upon your type of business, there may be other state and local requirements, such as a business license and a sales tax license. While this is all that is required to operate an LLC in Ohio, it is usually not enough.
For the members to enjoy limited liability for the debts and liabilities of the company, an operating agreement should be established, and the company should record annual and special minutes. When an LLC does not have a record of annual and/or special minutes, the company members run the risk of being held personally liable in the event of a lawsuit. In addition, an operating agreement will go a long way toward preventing arguments among members.
Finally, if you plan on raising capital for your business at any point in the future, whether through bringing on an additional investor or seeking angel or venture capital, it is important to ensure you have an operating agreement in place before you start your company.
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