What is an LLC?
A Limited Liability Company is a type of Company. Its often described as a hybrid between a corporation and a partnership. Because they provide the best features of both, LLC’s are rapidly becoming one of the most popular ways for new and small businesses to operate. An LLC is favorable because it avoids the double tax of a corporation, yet also affords its owners the personal liability protection of a corporation. LLCs minimize legal overhead, but still provide all the advantages of a corporation. This allows you to focus on growing your business, not paperwork.
LLC stands for Limited Liability Company. Because it is not a partnership or a corporation, the owners of an LLC are not partners or shareholders, they are “members.” Such companies are frequently labeled Limited Liability Corporations, but corporation is inaccurate and company is the proper term. An LLC actually combines aspects of partnerships and corporations, so an LLC is less formal and more flexible than a typical corporation, yet offers protection as well as certain advantages that are much the same. For example, members cannot be found personally liable for company debts. Their assets are separate from the assets of the LLC so they cannot be seized. One of the advantages of an LLC is that taxation is based on the partnership model. Flow-through taxation is advantageous since members are only required to pay taxes on their earnings once instead of paying both corporate and individual taxes. A Limited Liability Company, unlike a corporation, can be made up of as many members as t
An LLC is shorthand for a “Limited Liability Company.” It’s a type of legal entity that combines the benefits of liability protection for the owners of the business with the potentially favorable tax benefits of flow-through taxation. “Flow-through taxation” means the income of the business is only google_ad_client = ‘pub-2905054723170537’; // substitute your client_id (pub-number) google_ad_channel = ‘3393335763’; google_ad_output = ‘js’; google_max_num_ads = ‘3’; google_ad_type = ‘text’; google_feedback = ‘on’; google_targeting = “content”; taxed at one level, and not at two levels like C corporations. However, LLCs can be costly to set up and maintain, so think seriously about an S Corporation instead.
An LLC, or limited liability company, is a form of entity that is usually treated as a partnership for tax purposes but where all owners, called members, have their liability for obligations of the LLC limited to the amount of their investment in it. Its existence commences with the filing of Articles of Organization with the Secretary of State, and the members are governed by an Operating Agreement, which is similar to a partnership agreement. For tax purposes, items of income, loss, deduction, expense, deprecation and gain are taxed to the members as reported on K-1 schedules. It is similar to a corporation which has elected to be taxed under Subchapter S of the Internal Revenue Code.
Related Questions
- SHOULD THE SHARED OR FRACTIONAL OWNERSHIP USE A LIMITED LIABILITY COMPANY (LLC), OR LIMITED PARTNERSHIP (LP) OR LIMITED LIABILITY PARTNERSHIP (LLP)?
- ARE THERE ANY RESTRICTIONS ON A PHYSICIAN PRACTICING MEDICINE UNDER A LIMITED LIABILITY COMPANY (LLC) OR LIMITED LIABILITY PARTNERSHIP (LLP)?
- What is an LLC?
