What Is a Limited Liability Company (LLC)?
Limited liability companies (LLCs) have been generating a lot of buzz in the news lately — and for good reason: where the corporation fails, the LLC prevails. Think of the LLC as a merger of the partnership and the corporation, except it has the best of both worlds — all the good qualities of each and none of the bad. It offers full limited-liability protection to all the owners (like the corporation), yet has a pass-through tax status (like the partnership). In addition, the LLC has a second layer of liability protection that shields the business from any personal lawsuits that may befall you. And it doesn’t stop there! The list of benefits goes on and on. LLCs are relatively new entities. Therefore, they aren’t so easy for some folks to understand at first. Even if you’re familiar with corporations — or partnerships, for that matter — you still need to understand some new concepts and a few new terms.
A limited liability company, or LLC, is a business entity created under state laws which has the characteristics of both a corporation and a partnership. Like a corporation, the owners of an LLC are not personally liable for business debts. Like a sole proprietorship or partnership, an LLC has operating flexibility and is a pass-through entity for tax purposes. This means the LLC’s profits are passed through and taxable to the owners of the LLC. To learn more and speak with a representative, please call us at (888) 381-8758. We are happy to answer any questions you may have.
A Limited Liability Company (LLC) is a business entity formed by filing Articles of Organization with the appropriate state. An operating agreement does not have to be filed but it is an important document that should set forth the owners’ (members’) rights and responsibilities, their share of ownership, their voting rights, their shares of profits and losses and their distribution rights, all of which can be different and without regard to their capital contribution. As the name implies, a Limited Liability Company (LLC) provides the same limited liability for its members as a corporation does for its shareholders. Members are not liable for the debts, obligations and liabilities incurred by the business or for liability stemming from possible legal action. Normally, members cannot lose more than the amount they invested in the LLC. If the LLC goes bankrupt, the members will not be liable for its debts.
A limited liability company is a type of business entity that is independent of its owner. It can consist of one or more members which may be individuals, partnerships, limited partnerships, trusts, estates, associations, corporations, other limited liability companies or other business entities. The members of a limited liability company are afforded limited liability similar to shareholders of a corporation and are allowed pass-through taxation that is comparable to a partnership.
What Is a Limited Liability Company (LLC)?