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FREE LLC Guide
Glossary
LLC Terms, Definitions, and Glossary 
When forming an LLC, you need to understand all of the important LLC terms that apply to you and your company. Use this glossary to get a good understanding of all of the necessary terms.
Articles of Organization - The document that must be filed with the Secretary of State in the same state that the LLC is being formed.
Capital Contribution - The money, property, or services that an LLC member contributes to get in return future profits and voting power in the company.
Certificate of Good Standing - A certificate that provides proof that a company is legally an LLC and allowed to do business in the state where the company was formed. This certificate is issued by the state.
Convert Business - This term refers to your ability to convert a current business into an LLC. The new limited liability company takes on all the liabilities and assets of the previous business and the owners become the members of the company.
Corporation - An alternative to forming a limited liability company, a corporation also functions as a legal entity separate from its owners, but must follow different regulations and tax laws.
DBA - DBA stands for "doing business as" and refers to a fictitious name that the company uses to do business instead of the actual name of the company.
Federal Tax Identification Number - An identification number from the IRS for tax purposes, similar to an individual's social security number, that belongs to the company and is separate from any members' individual social security numbers.
Limited Liability Company - A limited liability company, also known as an LLC, is legally considered a separate entity from its members and prevents members from being held personally responsible for the debts of the company.
Capital Contribution - The money, property, or services that an LLC member contributes to get in return future profits and voting power in the company.
Certificate of Good Standing - A certificate that provides proof that a company is legally an LLC and allowed to do business in the state where the company was formed. This certificate is issued by the state.
Convert Business - This term refers to your ability to convert a current business into an LLC. The new limited liability company takes on all the liabilities and assets of the previous business and the owners become the members of the company.
Corporation - An alternative to forming a limited liability company, a corporation also functions as a legal entity separate from its owners, but must follow different regulations and tax laws.
DBA - DBA stands for "doing business as" and refers to a fictitious name that the company uses to do business instead of the actual name of the company.
Federal Tax Identification Number - An identification number from the IRS for tax purposes, similar to an individual's social security number, that belongs to the company and is separate from any members' individual social security numbers.
Limited Liability Company - A limited liability company, also known as an LLC, is legally considered a separate entity from its members and prevents members from being held personally responsible for the debts of the company.
LLC Business Name - Every limited liability company must have a unique business name that must be verified before forming the company. Whatever name is chosen, it must include some form of "Limited Liability Company" in the name (abbreviations are allowed). Some terms are not allowed in the company name, including incorporated, corporation, cooperative, bank, insurance company, and trust or trustee.
Manager - The manager is the person appointed by the members of the company to manage the operations of the company. The manager can be a member of the company, but is not required to be.
Member - Any owner of a limited liability company is called a member and there is no limit to the number of members that are allowed.
Membership Interest - The rights of ownership that each member has in the company is that person's membership interest. It can be transferred or sold at any time, but it is beneficial to lay down the ground rules for this when the company is formed.
Operating Agreement - A document that is created when the company is formed, the Operating Agreement describes how the company operates, who manages it, and the terms of membership.
Pass-Through Taxation - Pass-through taxation allows the company's profits to pass through to members as individual income before being taxed and avoids the double taxation that occurs in corporations.
Registered Agent - A person appointed by the members of the company to accept any legal documents that are issued against the company. The Registered Agent must have a street address in the state where the limited liability company was formed.
Manager - The manager is the person appointed by the members of the company to manage the operations of the company. The manager can be a member of the company, but is not required to be.
Member - Any owner of a limited liability company is called a member and there is no limit to the number of members that are allowed.
Membership Interest - The rights of ownership that each member has in the company is that person's membership interest. It can be transferred or sold at any time, but it is beneficial to lay down the ground rules for this when the company is formed.
Operating Agreement - A document that is created when the company is formed, the Operating Agreement describes how the company operates, who manages it, and the terms of membership.
Pass-Through Taxation - Pass-through taxation allows the company's profits to pass through to members as individual income before being taxed and avoids the double taxation that occurs in corporations.
Registered Agent - A person appointed by the members of the company to accept any legal documents that are issued against the company. The Registered Agent must have a street address in the state where the limited liability company was formed.
