One of the biggest and most well-known sports brands in the world, Nike, Inc. manufactures a variety of athletic footwear, clothing, and accessories. Nike is a Limited Liability Company (LLC) in the sense of a business. It can safeguard its assets and restrict the responsibility of its members because it is a separate legal entity from its owners. However, what made Nike decide to form an LLC, and how can someone form their own S Corp?
To start with, Nike decided to form an LLC in order to safeguard its assets and restrict the responsibility of its members. Nike is able to reduce the danger of loss and legal action by doing this and separating its personal and company assets. This means that, in the event that Nike were to face legal action, only the company’s assets—and not the owners’ personal assets—would be in jeopardy. This is a huge benefit for any business since it gives the owners piece of mind knowing that their personal assets are safe.
Choosing a company structure may be on your mind if you’re thinking about launching your own firm. S Corps and C Corps are the two primary types of corporate structures available to startups. Business owners can avoid double taxation by using S Corps, sometimes referred to as Subchapter S Corporations. Since this type of organization is intended for small firms with less than 100 shareholders, the “S” in S Corp stands for “Small Business”. Startups frequently choose S Corps because they provide the advantages of a corporation without the double taxation.
There are a few procedures you must do in order to establish your own S Corp. First, you must decide on a name for your business and make sure it may be used. After that, you must submit Articles of Incorporation to the Secretary of State of your state. The fundamental details of your business, including its name, address, and the names of its proprietors, are outlined in this document. You must draft company bylaws and hold your first board of directors meeting after your articles of incorporation have been authorized.
Finally, you might be asking whether an LLC or LLP is preferable. LLCs and Limited Liability Partnerships (LLPs) are two different kinds of business arrangements that provide its owners with liability protection. There are some distinctions between the two, though. Professional service companies, such legal firms or accountancy firms, frequently use LLPs. Each partner in an LLP is accountable for their own conduct and is not held liable for that of their fellow partners. Contrarily, LLCs are utilized by a variety of enterprises, including both small startups and big corporations. The owners of an LLC are referred to as “members” and are not held personally responsible for the debts or liabilities of the business.
To sum up, Nike decided to form an LLC in order to safeguard its assets and restrict the liability of its members. S Corps are a common option for small firms, but startups can also select between C Corps and S Corps. You must submit Articles of Incorporation and draft company bylaws in order to establish your own S Corp. Last but not least, both LLPs and LLCs provide liability protection to their owners; LLPs are frequently utilized by professional service firms, whilst a variety of enterprises use LLCs.