Openig up a business Essay Example | Topics and Well Written Essays - 500 words

Openig up a business - Essay Example In addition, the word limited should be included at the end of the company name. Some states prohibit the use of some names like insurance and banks (Clifford & Ralph 3). There is filing of the articles of association defines the rule governing the company and the outsider. The article of association contains information like the name, location and address of the company. Any fees charged should be paid. There is also creation of the company operating agreement that defines the rights and responsibilities of members. The agreement outlines members voting power, interest within the business and rules of holding a meeting. This entails the publication of notice in the newspaper to the intent of forming LLC. However, this requirement is needed by few states. The last step involves obtaining licenses and permits which are required for the business, to start operating for example, tax registration certificates. Upon completion of this step, the business is official (Clifford & Ralph 5). There is a reduction of paper work because tedious meetings undertaken by corporations are not needed in LLC. Quarterly and board meetings are needed, and this helps to cut down operation cost (Clifford & Ralph 6). Furthermore, members share profit as they wish since there are no restrictions in sharing profits. They contribute different capital proportions and equity; as a result, the members have to define who earn what share of profit or loss. There is flexibility in the management of public limited companies as they can be run by the owners, or even managers; as opposed to corporations that are managed by a board of directors. High formation expenses are required to cater for the formation of article of association and the registration fees. Publication of notice of intent to form a limited company also adds to this cost. Transfer of ownership is difficult as opposed to corporate entities. Within corporations share may be sold to increase ownership but this is impossible with