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Establishment of Limited Liability Company - Essay Example

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The author of this essay "Establishment of Limited Liability Company" comments on the steps of forming a limited liability company (LLC) which are fairly uniform in the United States with slight variations. Reportedly, it begins with selecting a name of our event management firm…
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Establishment of Limited Liability Company
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Download file to see previous pages Appointing an agent of service is mandatory in some states like Maryland. This step is to ensure that there is an entity in personal or business capacity who can accept legal notices and other documents on behalf of the firm being registered and is also physically present in the state. Next step in LLC creation for our business will be the preparation of operating agreement which would outline details of partnership arrangements within the firm although this condition may not be mandatory in many states. If required by law, there will be published notice about establishment of LLC (Mancuso, 2011). Following steps after registration will be obtaining IRS Employer Identification Number (EIN) since our selected model has more than one member and has the intent of hiring several associate designers and freelance managers (U.S. Small Business Administration, 2013a).
Every business needs capital to cover its startup and other operational expenses. In order to fund this event management firm, there are several options available for funding that can be considered. Firstly, the desired amount of capital can be raised by partners bringing in their own assets through liquidation or raising collateral loans against their properties (Bagley & Whynott, 1994). Every partner will have to bring in a certain amount that will be decided in the operating agreement. Where raising capital through one’s own assets is convenient, it also has inherent risks like losing assets if the business fails or partners being unable to pay off creditors if the loan is raised against their personal assets. On the other hand, where partners use personal saving like retirement funds, there can be severe penalties for untimely withdrawal and failure to make payment. Despite these risks, raising personal capital is the most common source of funding in small businesses due to convenience, no-cost, and speed. ...Download file to see next pagesRead More
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