In 1977, Wyoming became the first state in the U.S. to enact Limited Liability Company (LLC) legislation. This new type of business entity attracted a great deal of attention, and other states started following Wyoming’s example.
After a decade, the Internal Revenue Service declared that LLCs would be taxed on the lines applicable to partnerships. This provided the LLC a combination of the limited liability of a corporation and tax advantages of a partnership. The introduction of this new guideline increased the popularity of LLCs. Now all states and the District of Columbia have their own separate acts covering LLCs.
But LLC requirements differ from state to state. For instance, in some states single-member LLCs are permitted. Others require a minimum of two members. (A person having interest in an LLC is called a ‘member,’ not a ‘shareholder.’)
The fees for completing the necessary formalities also differ from state to state. Different states use different terms, as well. The essential document for registering an LLC is known as the ‘Articles of Organization’ in most states. But a few of the states refer to it as a ‘Certificate of Organization’ or ‘Certificate of Formation’. Rules relating to recognition of LLCs registered in other states also differ.
There is software available to help understand all the different states’ rules, but that is no substitute for uniform laws. A move for a Uniform Limited Liability Company Act (ULLCA) began in the 1990s when the National Conference of Commissioners appointed a Drafting Committee consisting of experts in the related fields. A draft of the Act was published in May 2005. This provides for multi-state recognition of LLCs and flexible default codes.
Since LLCs are of recent origin there are very few case laws or precedents.
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Limited Liability Company
10 August 2010 8:30 PM |
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The Limited Liability Company (LLC) is a comparatively new form of business entity, which started in Wyoming in 1977. It is neither a corporation nor a partnership, but combines the benefits of both. The persons who have interest in an LLC are known as ‘members’...
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Limited Liability Company Advantage
10 August 2010 8:30 PM |
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Limited Liability Companies (LLC) offer several advantages over corporations and partnerships. They can be registered in a very short time. The process is simple and the costs involved are not high. Basically, the Articles of Organization (in some states referred to as a Certificate of...
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Limited Liability Company Operating Agreement
10 August 2010 8:30 PM |
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An operating agreement is the code by which Limited Liability Companies (LLC) operate. In many states an operating agreement is not compulsory because in its absence the state law will apply by default. That may not be suitable situation for many LLCs, which require specific...
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Limited Liability Company Formation
10 August 2010 8:30 PM |
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Forming a limited liability company (LLC) is not difficult. First of all, you must decide on the type of business, name and the location. Then check the availability of the name and reserve it if you like. The name should end with the letters LLC...
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Limited Liability Company Agreements
10 August 2010 8:30 PM |
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A limited liability company, commonly called an LLC is a business organization that is a hybrid between partnership or sole proprietorship and corporation. Like owners of partnerships or sole proprietorships, LLC owners account for business profits or losses on their personal income tax returns and...
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Limited Liability Company Form
10 August 2010 8:30 PM |
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Establishing a Limited Liability Company (LLC) requires a lot of paperwork. This includes forms for registration, for obtaining permissions and licenses to run the business, and for tax purposes. In fact, there is more paperwork involved for an LLC than for a partnership firm. Since...
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Single Member Limited Liability Company
10 August 2010 8:30 PM |
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Several states permit the formation and operation of a single-member Limited Liability Company (LLC). The question that arises automatically is why anyone should register himself as a LLC when he can run the business as a sole proprietary concern. The answer is simple – with...
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Limited Liability Companies Online
10 August 2010 8:30 PM |
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Limited liability company is similar to a corporation but is suitable for smaller companies with limited number of owners. It is a legal business entity where owners have limited personal liability even if they take part in the management. Similar to sole proprietorships and partnerships,...
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Limited Liability Corporation Forms
10 August 2010 8:30 PM |
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A limited liability corporation is a separate business entity that combines the various characteristics of partnership and corporation to form an entirely distinct legal unit. Limited liability corporations can be broadly distinguished into two forms, namely single-member limited liability corporations and multiple-member limited liability corporations....
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Limited Liability Company Taxes
10 August 2010 8:30 PM |
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Limited liablity companies are more likely to be subject to a state’s franchise taxes. This franchise tax is the fee the LLC pays the state for the benefit of limited liability. A LLC is not a separate tax entity, instead, it is what the IRS...