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 the LLC itself is not a separate taxable entity. Like in a corporation, in LLC, all owners are protected from personal liability in case of business debts and claims. This feature is known as “limited liability.” This means that if the business owes money or faces a court case for any reason, only the assets of the business itself are at risk. Creditors usually cannot reach the personal assets of the LLC owners, such as a house or car. For these reasons, many say that LLC combines the best features of both the partnership and corporate business structures.
Forming a Limited Liability Company may not be as simple as a sole proprietorship, however, the process is less than a corporation. The main documents that are advisable to be drafted are Articles of Organization and the Operating Agreement. When planning to set up a limited liability company, articles of organization have to be filed with the Secretary of State and the required fee has to be paid. Articles may be prepared by a lawyer or filed by the individual or the group interested in starting a LLC. Although in many states it is not required to draft an operating agreement, it is advisable. Every LLC member’s distributive share, that is share of profits and losses, is set out in the LLC operating agreement.
The LLC Operating Agreement may range from 12 to 16 pages in length depending on its complexity, and contains information regarding the company’s name and address, registered agent information, name and address of each LLC member, items contributed by each member, date of company dissolution, appointment of LLC officers, accounting method, and LLC management structure and operation.
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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 Company Advantage
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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 Corporation Forms
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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 LiabilityCompany Corporations
10 August 2010 8:30 PM |
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A limited liablity company (LLC) is a legal form of company offering limited liability to its members. In a LLC, all members are protected from personal liability in case of business debts and claims and this feature is known as “limited liability.” This means that...
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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
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 Companies Online
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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
10 August 2010 8:30 PM |
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A limited liability corporation refers to a business unit that has acquired a unique legal structure. It is different from other forms of business structures, like sole proprietorships, partnerships and corporations. It provides the advantages of a partnership or corporation, while being shielded from the...
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Limited Liability Corporation Definition
10 August 2010 8:30 PM |
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A limited liability corporation can be defined as a unique legal business unit generated from an amalgamation of the various characteristics of partnership and corporation. It has a separate existence distinct from other business models like sole proprietorship, partnership and corporation. Although this concept is...
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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...