Getting Started
          
          
               The limited liability company might soon be the
          vehicle of choice for many small business owners.  Most
          business owners consider only whether they should own a
          regular corporation, an S corporation, or a
          partnership.  The LLC often offers the best features of
          the corporation and the partnership and should be
          seriously considered by most small business owners.
               The LLC is recognized by law in almost all states
          now.  An LLC is a special form of business organization
          that protects its owners from personal liability just
          as a corporation does.  But the IRS has recognized the
          LLC as a partnership for tax purposes, so the LLC does
          not face the double taxation of profits that a regular
          corporation faces.  In addition, the LLC can divide
          income and expenses between owners to the same extent
          that a partnership can.  An LLC also avoids the 35-
          shareholder limit and other restrictions placed on S
          corporations.  If you want to be taxed directly on
          business income and have the limited liability of a
          corporation and the flexibility of a partnership,
          consider the LLC.
               For more information on forming a Delaware LLC,
          write to LLC Information Package, 818 Washington
          Street, Wilmington DE 19801.  Delaware has
          traditionally been one of the best states in which to
          register companies and hold assets, because the court
          system is very protective of private property.
               If you already have either a regular corporation
          or an S corporation, you will definitely want to
          consider the advantages of using an LLC.  By replacing
          your S corporation with an LLC, you avoid the risk of
          the IRS suddenly deciding to tax the S corporation at
          regular corporate rates because you made some small
          mistake that caused the S corporation election to be
          revoked.
               Another little known tax angle is using an LLC
          along with your regular corporation.  For example,
          supposing you have a business which owns its own
          building.  You can use a regular corporation for the
          active business, and take advantage of the tax breaks
          available to corporations, such as being able to set up
          a pension plan and health insurance.  
               You then have the LLC own the building, and rent
          it to the business corporation.  The business pays rent
          to the LLC, which becomes taxable income to you.  But
          since this is rent income, not salary from the
          business, you don't have to pay social security tax on
          this part of your income.  And having the building
          owned by the LLC still gives you limited liability to
          protect you against lawsuits that might arise from
          being a property owner.