| Business and Corporate Law |
| Incorporation - Different Types |
| Limited Liability Company |
| The Best Structure For Your Business |
| Business Forms |
| Shareholders Agreements |
Limited Liability Company
A limited liability company (LLC) is a business structure that is unincorporated, yet provides its owners a limited liability, a feature which is normally available to a corporation. Because of its limited liability feature, if the business incurs monetary obligations or a lawsuit is filed against it, as a general rule, only the business assets are exposed to the risks. The company's creditors cannot go after the personal assets of the LLC owners. Like general partnership, LLC also allows all of its owners to take part in managing the business.
An LLC may choose that it will not be a separate and distinct taxable entity. The effect is that only the LLC members will be subject to tax. When the LLC elects not to be taxed separately, then it becomes similar to a general partnership and sole proprietorship, that is, it enjoys the pass-through tax treatment. It becomes the LLC owner’s responsibility to report his or her share of the LLC profits (or losses) upon filing personal income tax returns.
All states have enacted their own version of a limited liability company statute. Majority of states allow owners to assign their financial interest in the company. However, the assignee may only be permitted to become a member if it is allowable under the operating agreement, and/or all its members give their consent. There are states that allow dissolution of the LLC because of bankruptcy, withdrawal or death of a member. Some do not allow such events to cause LLC dissolution.
Because LLC provides limited liability protection, pass-through tax treatment, and operational flexibility, its appeal as an alternative to the traditional partnership and corporate business structures has become increasingly attractive. Some particularly appropriate uses of the LLC structure are for closely held businesses, venture capitalist firms and for international transactions. The LLC structure may also be useful for professional groups and exempt organizations. A consultation from an attorney as regards to the viability of LLC as the structure of your business would be of tremendous help.