What is an LLC? What does LLC stand for, what does llc mean, what is a limited definition, company definition, limited liability definition, a liability definition?
LLC stands for limited liability company. Forming one limits liability between your personal assets and that of the business. Assets and liabilities taken on by the company remain separate from those you personally assume.
A Limited Liability Company (LLC) has characteristics of a corporation and a partnership. An LLC allows its owners not to be personally liable for debts or liabilities of the business like a corporation, but have the tax benefits of partnerships. The owners of an LLC are called members which are somewhat analogous to shareholders. A member can be a natural person, a corporation, a partnership, or another legal association or entity. Unlike corporations or sole proprietorships, which may be formed by only one person, in most states, LLC's must be formed and managed by two or more members. The members may run the LLC themselves or through appointment of managers, who have similar levels of fiduciary duty to the LLC as do Directors of a corporation.
Limited Liability Company Tax Benefits
Be sure to always consult your accountant since tax laws change with time and jurisdiction. That said, generally an LLC allows profits to be passed through to the owners as income tax like a partnership, rather than as in a corporation where the corporation pays taxes on the income and then the owners, if they receive salary, pay tax on their salaries also.
Like other businesses, an LLC needs to have a license to do business in towns in which it has offices and may use an assumed name, so that Blow LLC could operate as Blow Holes.
Members' interests may be freely transferred to nonmembers, however that member receives only the financial benefit of the membership and does not become a member unless admitted by unanimous vote. The interest of a member in the business is in proportion to his or her capital contribution to the LLC. The death of a member dissolves the LLC unless otherwise stated in the operating agreement.
Advantage Limited Liability Company
With regard to taxes, the LLC is not a separate taxable entity unless it fails in the determination of the IRS to qualify as a partnership for tax purposes and if so it is taxed as a corporaiton. Any gains, losses, credits, and deductions flow through the LLC to the members, who report them as income and losses on their personal tax return.
Disadvantages of Limited Liablity Company
LLC's have similar formation, state registration, agent for service and other costs and corporate procedures to corporations. As there is no state law structure of shareholders, directors and officers already established as with corporation, and unless the state has other regulations, the LLC members create their operating structure and have an operating agreement; some states now have some required protections for LLC's that are similar to structural protections of corporations. It is very important to have a good attorney draft an Operating Agreement for an LLC owned by more than one person as they can be extremely complex.
LLC's vary in legal requirements and liabilities by state and do not have the easy of transfer and investment that a corporation structure provides and therefore are some times regarded as less preferable to C or S corporations.
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AS THE LAW CHANGES WITH TIME AND JURISDICTION.
Judith Silver, author of the articles and information on this site, is located in FL, and is an attorney licensed in FL, CA, NY and TX .
(c) 2000-2020 Coollawyer LLC
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ALWAYS CONSULT AN ATTORNEY BEFORE USE OF LEGAL FORMS
AS THE LAW CHANGES WITH TIME AND JURISDICTION.
Judith Silver, author of the articles and information on this site, is located in FL, and is an attorney licensed in FL, CA, NY and TX .
(c) 2000-2020 Coollawyer LLC
Privacy Policy / Contact Us