Are you a small business owner that has been asked if their company is an LLC, and you don’t know what that means? Or maybe you are an entrepreneur in the initial phases of opening a new business, and your head is swimming with all the options ranging from a sole proprietorship to an LLC to a corporation.

Keep reading for everything you need to know about an LLC and whether it is the right option.

What is an LLC?

A Limited Liability Company (LLC) is a business structure that provides the owners with protections that are usually only available to corporations but keeps the simplicity of a sole proprietorship.

This entity also provides pass-through taxation as it is run through a separate entity that isn’t restricted to a specific number of shareholders and isn’t heavily regulated.

Related: How to Start a Limited Liability Company (LLC) | Entrepreneur

What are the benefits of an LLC?

There are benefits to every business structure. From a corporation, general partnerships and sole proprietorships each offer unique advantages.

The benefit of forming an LLC is that it takes the pros of each business structure and combines them into one.

How can an LLC provide asset protection?

One of the main advantages of an LLC is that it protects your personal assets.

For any business debt or lawsuits that your business may run into, the owner has no personal liability. This ensures that their personal assets cannot be taken as payment as they are completely separate from the company.

Related: LLC Basics – Entrepreneur.com

What tax options does an LLC have?

An LLC provides more tax options than other business models.

For tax purposes, they are either taxed as a sole proprietorship or a partnership, depending on the management structure and how many members are involved in the company.

Members report their share of the business income and expenses on their personal tax return and then pay personal income tax on the profit.

Members who also work in the business are then considered self-employed and must state this on their federal income tax return and then pay self-employment taxes on their share of the profits.

If the company doesn’t want to be taxed as a sole proprietorship or partnership, it can also choose to be taxed as an S-corporation (S-corp) or a C-corporation (C-corp).

A C-corp pays corporate tax, and the owners pay tax on their distributions. An S-corp is what is known as a pass-through entity which means it doesn’t pay corporate tax, but each owner does pay personal income tax on their share of the profits.

It is important to note that not all LLCs qualify for S-corp taxation as they must meet certain IRS (Internal Revenue Service) requirements.

A single-member LLC can also be designated as a disregarded entity. What this means is that it will be disregarded or ignored concerning federal income tax.

Related: The 5 Biggest Tax Differences Between an LLC and Corporation | Entrepreneur

Does an LLC provide flexibility?

As LLCs are not required by law to have annual shareholder meetings or even require a board of directors, they provide greater flexibility than other business models.

Rather, members of an LLC are free to organize the company as they see fit and be member-managed, as administrative requirements like most corporations don’t bind them.

Related: Choose Your Business Structure | Entrepreneur

Does an LLC designation make your business more credible?

When you structure your business as an LLC, you receive exclusive rights to use your business name as a business entity.

As most states don’t allow a business to use an existing business name, you can create a public record of your name, making it unavailable.

The LLC designation at the end of the company name can also lend credibility to a business.

Related: How to Structure a Single Member LLC | Entrepreneur

How are profits distributed in an LLC?

One main advantage of an LLC is that members can decide how the profits are divided.

Typically, corporations issue dividends, and partnerships usually split the profits among the partners, but owners of an LLC can choose how the profits are divided up.

Remember that the IRS has rules about the special allocation of profits, and you might have to show proof of profit sharing or legitimate economic need to prove it is not simply an attempt to avoid paying taxes.

Are there disadvantages of an LLC?

While an LLC has specific benefits, it also has some notable disadvantages.

The profits are subject to high LLC tax

The profits of an LLC are subject to social security and Medicare taxes. In some cases, owners of an LLC can even end up paying more taxes than a corporation does.

Also, both salaries and profits of an LLC are subject to self-employment taxes which currently equal approximately 15.3%. Whereas with a corporation, only the salaries are subject to taxation, not profits.

This disadvantage hits owners who take a salary of less than $97,500 the hardest.

Related: Pros and Cons of the LLC Model | Entrepreneur

An LLC has to immediately recognize its profits

Unlike a corporation, owners of an LLC have to immediately acknowledge their profits.

A C-corp doesn’t have to distribute its profits immediately to the shareholders. This means a C-corp isn’t always taxed on the company’s profits.

Since an LLC is not subject to double taxation, the company’s profits are then automatically included in the member’s actual income.

Related: Business Structure Basics | Setting Up | Entrepreneur

There are fewer fringe benefits available

Employees who receive fringe benefits such as group insurance, medical reimbursement, medical insurance and parking must treat these benefits as taxable income with an LLC. This is also true for employees who own over 2% of an S-corp.

On the other hand, employees of a C-corp who receive fringe benefits do not have to report these as taxable income on their income tax return.

How to set up an LLC

There are seven steps you need to take to start an LLC.

There are different state law requirements from state to state, so it is recommended to talk to a legal professional about the specific requirements where you live.

Choose a business name

The first step to starting an LLC is choosing your business name.

Not only do you need to choose a name that doesn’t already exist, but your state may also have certain requirements it needs to meet.

Related: How to Name a Business: 7 Helpful Tips | Entrepreneur

Choose a registered agent

The next step is to choose a registered agent. A registered agent receives official and legal documentation on behalf of the company. Once the registered agent receives these documents, they pass them on to the company.

The registered agent has to be at least 18 years old. You are allowed to choose yourself or an employee. The main requirement is the agent must have an address within the state during typical business hours.

Related: 4 Best LLC Services of 2023 | Entrepreneur Guide

Obtain a copy of your state’s LLC Articles of Organization Form

In most states, you will have to file a document called the Articles of Organization with the state agency that handles business filings to establish your LLC.

Each state has a specific form you will use; some also call it a Certificate of Formation.

Complete the LLC Articles of Organization Form

Every state has specific requirements for individuals trying to create an LLC. Some of the typical information you may need to provide includes:

• The business name.
• The principal address of the business.
• The business’s purpose.
• How the LLC will be managed.
• The registered agent’s contact information.
• The duration of the LLC.

Once you have this form filled out, at least one of the business owners will then need to sign it.

Related: Ten Steps to Organizing an LLC | Entrepreneur

File the Articles of Organization

Make sure to thoroughly check the Articles of Organization Form before you submit it.

You may also be required to pay a filing fee, which differs from state to state.

Once your form has been approved, the Secretary of State’s office will issue you a certificate to prove that your LLC is formally registered.

You can use this certificate to complete tasks such as setting up a business bank account and registering for a tax ID number.

Related: Choose Your Business Structure | Entrepreneur

Create an LLC Operating Agreement

Now that the state has approved you, it is time to create an Operating Agreement.

An Operating Agreement outlines all the details of the financial, legal and management rights that all members of the LLC are entitled to.

In particular, it includes how the profits will be distributed, how members can leave the LLC and who is required to contribute capital.

You can create your Operating Agreement, especially if you are a single-member LLC. Hiring an attorney may be a good option for more complicated situations, such as with multi-member LLCs.

Related: Why So Many LLC Operating Agreements Fail | Entrepreneur

Keep your LLC active

Now that your LLC has been created, you need to keep it active.

This means you must ensure you are keeping your business in good standing with your state. This can include the LLC filing an annual report that keeps your company’s info up-to-date and paying an annual fee for filing.

Related: business – The Many Benefits of Forming an LLC | Entrepreneur

Start an LLC today

With benefits ranging from business flexibility, different taxation options and personal asset protection, creating an LLC might be the next step your business needs to take.

By following the steps above and consulting an attorney in your area, you could soon run your own LLC and reap all its benefits.

Check out Entrepreneur’s other articles for more information about LLCs and other financial topics.

First the ‘Great Resignation’, then ‘quiet quitting’, followed by now ‘quiet hiring’.

Yes they’re buzzwords, but is this indicative of how much is changing in the workplace today when it comes to talent management and mobility?

With so many factors at play, it’s hard for HR leaders to stay on top of what’s happening. No wonder they’re both excited (over 90%) and worried (66%) about the future.

Talent management was also ranked by HR and business leaders as their number one priority right now, our recent research found.

So what do HR leaders need to know to understand what’s happening right now?

Here’s what we cover in this article:

Talent management today: Changing employee-employer expectations

First, the Great Resignation

As we saw with the Great Resignation, where record numbers of people left their jobs due to the pandemic, employee expectations of their workplaces have evolved – and continue to do so.

The pandemic shifted employees’ expectations practically overnight. Many were no longer expected to come into the office and companies had to prioritise wellbeing above everything else.

Now, since we’ve emerged from the pandemic, employees have reassessed what they want from their workplaces and they’re leaving in search of a better work-life balance, competitive pay and more job satisfaction.

While talk of the Great Resignation may be slowing, employee expectations of their employers continue to evolve.

Then, quiet quitting

Quiet quitting is another buzzword that’s been bandied around of late but it’s not something new.

Employees the world over have actively withdrawn from their work at various moments in time, choosing to just do the bare minimum and not go over their contractual hours.

From an HR perspective, we don’t think quiet quitting should be viewed as good or bad – more that it’s something that is likely to happen from time to time and it’s important to have greater awareness of it.

In fact, we believe it’s an opportunity to engage more with employees.

It’s a chance to find out what is going on for the individual employee, and teams, and to see if there are ways the business and the manager can better support that person further.

Now, quiet hiring

Quiet hiring has been the latest buzzword to make the headlines.

It’s a new name for an old tactic, effectively shuffling employees around departments or projects to fill the gaps within an organisation rather than hiring new people.

And it’s a reflection of the current economic climate we’re in.

In fact, 8 in 10 employees say they’ve been ‘quiet hired’, a recent survey found.

Tighter operating costs and decreasing profit margins mean businesses have to be smarter about tapping into their internal resources, particularly where organisations are experiencing hiring freezes to save on costs.

While this internal movement might signify the current economic climate we’re currently in, helping employees to build up skills in other departments or areas or utilise skills they already have is definitely of benefit to those who want to develop.

However, stress and burnout is already rife among employees.

In fact, 52% of all workers are feeling burned out today, up 9% since the global pandemic. Organisations must be careful that employees don’t take too much on.

A buzzword is just a buzzword

There’s so much change and uncertainty happening right now.

With that, buzzwords such as the Great Resignation, quiet quitting and quiet hiring are coming to the fore to help us to understand what’s happening in the world of work today and the gap that seems to be widening between employees’ and employers’ expectations.  

However, a buzzword is just that – they attempt to sum up some of the change we’re experiencing.

But the workplace today is much more complex than ever before and there are many more changes happening which can’t be summed up in a few words.

The future of talent management: Is the Great Rebalance coming?

Callum Borchers of the Wall Street Journal says: “This may be the year when employer-employee power dynamics begin to normalise.”

Right now, 93% of HR and the C-suite are worried about current economic uncertainty, high inflation levels and a rise in the cost of living, both employers and employees are feeling the pinch.

Job-hopping and fewer counter-offers are likely as the demand for talent and the supply of candidates starts to even out in what is being called the Great Rebalance (also known as the Great Rebalancing).

However, not everyone agrees that the balance is coming quite yet.

There’s still a lot in flux in the world of work after the global pandemic and big shifts continue to happen, such as the four-day working week and the rise of artificial intelligence (AI) adoption, which could lead the gap to widen further.

Hybrid work is an example of this where it’s, arguably, still a work in progress.

Denise Rosseau, Professor of Organisational Behaviour and Public Policy at Carnegie Mellon University, explains: “If people are told different things at different times, without influence over that decision, it’s disturbing.

“The yo-yoing back and forth breeds uncertainty, and people don’t like that there are just so many unknowns.”

For HR, it’s an opportunity to reassess what employees need from their workplaces.

However, organisations will have to do more with less.

With budgets being frozen or cut in many organisations as finance try to balance the books, HR will need to think out of the box about how they can evolve their talent management strategy to bridge the gap between employee expectations and business needs in this challenging market.

We did some research to find out what the future of talent management could hold, so you can start to get ahead today.

1. Goodbye to the term employee experiences and hello ‘people sustainability’

We know employee experiences are vital for productivity and 83% of HR leaders say that they’ll be focusing more on experiences in the future as a result, but should people sustainability be front of mind instead?

US consulting firm Mercer describes people sustainability as: “Treating people responsibly, taking care of people’s physical and mental well-being and valuing talent for their contribution.”

Josh Bersin, CEO of the Josh Bersin company, believes focusing on people sustainability over everything else is the future.

He explains in his trends blog: “Traditional areas like DEI [diversity, equity and inclusion], benefits, health and safety, or employee experience, cluster together around the concept of ‘people sustainability’.”

Josh goes on to say: “There is a never-ending stream of good ideas to promote fairness, equity, belonging, and wellbeing at work, but we need to think about all these programmes as long-term investments and wrap them all up together into ‘long-term sustainability’.”

People sustainability is particularly important during times of economic uncertainty when budget cuts and freezes are happening.

Why?

Because the aspects that make up people sustainability drive engagement and productivity.

We’re in difficult times but these programmes are not just about doing the right thing, they’re also what make employees feel like they belong.

Honing in on that will be key over the next few years. 

2. Skills not jobs

The future of recruitment and talent management will focus not on jobs to do, but skills needed instead.

With today’s competitive talent environment, more companies will be looking for candidates with the skills needed, even if they don’t have the direct experience.

Becky Schnauffer, global head of strategic clients at LinkedIn Talent Solutions, explains: “Businesses up and down the country are facing skills gaps, making it harder to capitalise on growth opportunities and overcome uncertainty in the year ahead.”

87% of companies said they were experiencing a skills gap according to McKinsey Research and the World Economic Forum warned that over 50% of employees around the world will need to reskill or upskill by 2025 to stay competitive. 

Despite the cost of training, upskilling and reskilling can be more cost-effective alternatives to recruiting.

Research by Gallup found the cost of replacing an employee is between one-half to two times their annual salary.

Meanwhile, the World Economic Forum estimated that to reskill employees can average around $24,000 per employee.

Moreover, your people will thank you for it.

Katy Tynan, Analyst at Forrester Research says: “You’re losing talent when you only see people through the lens of the job they’re hired into.”

Employees are looking for opportunities to learn and develop new skills, and if they don’t get them, they will leave. Up to 20 million UK professionals are considering switching jobs this year alone, according to recent LinkedIn research.

3. A powerful multigenerational workforce

89% of talent professionals believe a multigenerational workforce relates to the success of a business.

We know diversity is good for business and age-based diversity is just one of those, so have you started to consider Generation Alpha?

Generation Alpha is the next generation to be introduced into the workforce.

Named because Alpha is the first letter of the Greek alphabet, this generation who were born from 2010 onwards will be the first age demographic born entirely within the 21^st century.

It might seem like a long time until someone from Generation Alpha starts at your organisation, but if you’re a company that supports apprenticeships and those early in their careers, you could be seeing job applications fly in from this generation from 2026 onwards. 

So what can you expect from Generation Alpha? According to Dan Schawbel, Managing Partner of Workplace Intelligence, they’ll be “prepared to thrive in our tech-enabled workplace”.

Dan adds: “Alpha’s have access to more tools, resources and people at an earlier age than any other generation.”

Organisations will need to consider what this means for existing generations in the workplace.

Dan explains: “This accessibility gives them a massive competitive advantage as they age but has a side effect of further expanding the generational digital divide.”

To get ahead, organisations need to think about how they continually bring generations currently in the workforce up to date with latest technologies, so they’re not at a disadvantage.

However, getting your organisation up to speed for Generation Alpha will go further than just the technology, including ways of working and the types of companies they’d likely apply for, so there is much more to consider.

4. Overhaul performance management

Right now, over three-quarters (76%) of companies don’t use automated data collection and analysis around performance our research revealed.

And 74% don’t give continuous feedback or provide competency assessments against key job skills.

Performance management is key if you want to help your employees upskill and develop, and plays a crucial part in managing talent effectively.

But performance management processes are often not fit for purpose.

Perry Timms, Chief Energy Officer at People and Transformational HR, explains in an interview on performance management: “If we’re trying to navigate a complicated world, and how well we’re doing in terms of our performance and capability in that world why would this episodic thing, a done to process mean anything to anybody?”

So, what lies in store for the future?

The annual appraisal will be dead and in its place are continuous conversations. In fact, 82% of HR leaders agree.

83% of HR leaders say goals will be fairer in future, more objective, and even more personal and professional.

“Performance management should be about people having a real sense of how they’re doing, where they’re going, what they could be doing more of, and an exchange that means something to them and the person who has a duty of care for them,” says Perry.

One thing HR leaders can do now to be prepared for the future is to get the right technology in place.

Nearly all (95%) of HR leaders say technology is needed for successful performance management, but 43% of HR leaders don’t rate their performance management software as very good.

Looking for an HR technology suite with performance management as part of that will be vital to successfully move to a continuous conversations format for performance, so don’t leave it until the last minute – start now.

Navigating the future of talent management with HR tech

Ultimately, many HR leaders get into the sector because they want to make a difference.

And managing talent is where HR can make the most impact – to support their people and play their role in building brilliant and resilient workforces.

In fact, 57% of HR leaders told us they love what they do.

While we don’t know what the future holds for certain, we know HR leaders are overworked and overstretched more so than ever right now with all the challenges and uncertainty HR teams and their organisations are dealing with.

Nearly all (95%) of HR leaders we polled said that HR is simply too much work right now.

Relying on HR tech can help HR leaders to lighten the load and swap the time they spend on processes and paperwork to use on their people strategy instead – and bridge the employee-employer expectations gap once and for all.

By reducing the admin through HR automation, HR leaders can dedicate more time to their people strategy instead – and that’s what truly matters.

Discover more about HR automation and how to use technology to automate core HR processes – so you can scrap the paperwork and focus on your people.

Follow me on Twitter @Jacqmelinek for breaking crypto news, memes and more.

Welcome back to Chain Reaction.

Although there are a lot of builders in the crypto space, the total money being invested into the crypto market has hit 32-month lows in May.

Cryptocurrency monthly exchange volume, which calculates spot market volume across all crypto exchanges, was $439.42 billion in May, down over 27% from $604.88 billion in April, according to data from The Block.

Last month’s volume was the lowest level since October 2020 at $222.7 billion, the data showed.

Binance, the largest exchange, saw about $218 billion in monthly exchange volume during May, dropping about 26% from $293.83 billion in the previous month. Potentially as a result of the bear market and decreased demand, the exchange shared that it’s reevaluating its workforce headcount ahead of future market cycles.

Over the past six years, the exchange grew from 30 employees to a team of almost 8,000 employees across the globe, a Binance spokesperson told TechCrunch.

“As we prepare for the next major bull cycle, it has become clear that we need to focus on talent density across the organization to ensure we remain nimble and dynamic,” the Binance spokesperson added. “This is not a case of rightsizing, but rather, reevaluating whether we have the right talent and expertise in critical roles, and therefore we will still be seeking to fill hundreds of open roles.”

The reevaluation will also include “looking at certain products and business units to ensure our resources are allocated properly to reflect the evolving demands of users and regulators.”

This statement comes after a tweet on Wednesday by reporter Colin Wu that said multiple sources confirmed that Binance has started layoffs. While the actual number is “uncertain,” the exchange may have laid off as many as 20% of its roughly 8,000 employees.

Patrick Hillmann, Binance chief communications officer, also disputed the claim in his own tweet thread and said the company is not cutting 20% of employees “as a cost-cutting measure.”

The number of employees who were laid off could be “a much smaller figure,” Hillmann said in another tweet. “We won’t know until our teams conduct the talent density audit.”

Even with the volatility of the current market and exchange volumes down substantially, Hillmann said the layoffs have “nothing to do with ‘market conditions’ today.” The company is still looking to fill hundreds of roles, the spokesperson said.

This week in web3

Solana’s co-founder sees potential for its blockchain to be the ‘Apple of crypto’ (TC+)

Solana’s core engineering and ecosystem is focused on creating a network “that feels like the regular internet, when it’s an entirely new financial internet,” co-founder Raj Gokal told TechCrunch+. There’s lots that the network is doing to keep itself fresh and competitive. “The core thesis is going to be [focused on] new businesses, new projects, independent developers,” Gokal said. “We are still in an ecosystem and a community that is optimistic about what two developers in a garage can do.”

SEC settles with former Coinbase employee over insider trading charges

The SEC has settled charges with a former Coinbase product manager and his brother for engaging in insider trading, the agency announced Tuesday. Ishan Wahi, the former Coinbase employee, and brother Nikhil Wahi engaged in “a scheme to trade ahead of multiple announcements regarding at least nine crypto asset securities that would be made available for trading on the Coinbase platform,” according to the SEC. The two brothers were originally charged after the agency filed a complaint on July 21, 2022.

Explaining Blockchain Capital’s big bet on an eyeball-scanning orb

We talked with Blockchain Capital General Partner Spencer Bogart about what gave him confidence in Worldcoin, which aims to create a global ID, a global currency and an app that enables payment, purchases and transfers. Like many others, we wondered how it can achieve its goals when, right now at least, its mission relies on convincing millions of people to allow Worldcoin to scan their irises using glossy, tech-dense orbs.

The latest pod

For this week’s episode, Jacquelyn interviewed Gary Vaynerchuk, better known as Gary Vee. He is the chairman of VaynerX and CEO of VaynerMedia and NFT collection VeeFriends.

He’s a five-time New York Times bestselling author and previously created Wine Library, one of the first e-commerce platforms for alcohol, in the early 2000s. In 2009, he co-founded VaynerMedia with his younger brother AJ, and today the company services clients like PepsiCo, GE, Johnson & Johnson, Chase and others.

Gary Vee is a “die hard” New York Jets fan (and wants to buy the team one day), as well as an investor in a handful of major companies like Twitter, Venmo and Facebook — which we talk about in the episode.

We dove into a handful of topics surrounding the NFT ecosystem, how Gary Vee got into the space and gained traction for his collection, and where he sees the sector going long term.

We also talked about:

• VeeFriends’ origin story
• The importance of intellectual property
• Mainstream adoption
• The future of NFTs
• Advice for other projects

Subscribe to Chain Reaction on Apple Podcasts, Spotify or your favorite pod platform to keep up with the latest episodes, and please leave us a review if you like what you hear!

Follow the money

1. Blockchain-based game Illuvium raised an additional $10 million from Framework Ventures
2. PayPal-backed crypto wallet Magic raised $52 million
3. Metaverse-focused MetaZone raised $3 million
4. Fiat on-ramp and off-ramp developer Transak raised $20 million in a Series A
5. M80 raised $3 million to create a web3-focused esports organization

This list was compiled with information from Messari as well as TechCrunch’s own reporting.

To get a roundup of TechCrunch’s biggest and most important crypto stories delivered to your inbox every Thursday at 12 p.m. PT, subscribe here.