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’ rather than ‘shareholders’. The liability of members is limited to their investment in the LLC. This means that they cannot be held personally liable for company debts unless they have stood a personal guaranty. Tax liability is like that of a partnership, but this may differ in the case of a single-member LLC.
The laws relating to LLCs vary from state to state, though there are attempts to bring about a national, uniform code. Software explaining individual state rules and the details of the procedures for registration and operation is available. Registration is simple and the cost is moderate. The process can be completed within a couple of days. You can either do it yourself, with the software, or entrust the job to a professional.
One (in some states) or more persons can form a LLC by filing the required papers with the Secretary of State and paying the stipulated fees. Banks and insurance companies may not qualify to register a LLC. Certain states restrict some professionals, like accountants and architects, from forming an LLC to render their services.
The management of an LLC is very flexible. The members can decide on the type of management they want. Either all the members together, a single member or a small group of members can run the company. Alternatively, an outsider (including a corporation) can be appointed to manage the affairs of the company. The management parameters are usually set out in a document known as the Operating Agreement.
Normally the voting rights would be in proportion to the interest held, but with the consensus of members it could be one member one vote. The members can also decide the guidelines for profit sharing, mode of dissolution and transfer of interest.
A properly structured LLC can be ideal for several types of businesses. That is why LLCs are gaining in popularity.
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Limited Liability Company Act
10 August 2010 8:30 PM |
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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...
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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 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 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 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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Nevada Limited Liability Corporations
10 August 2010 8:30 PM |
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The general tax structure and the simplicity in forming the limited liability protection in Nevada is the major cause for various people or many businesses opting for Limited Liability Companies (LLC). Forming an LLC in Nevada makes very reasonable in your tax structure. The taxes...
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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 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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Limited Liability Corporation Advantages
10 August 2010 8:30 PM |
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A limited liability corporation is a separate corporate business unit that has a separate legal structure. Although it incorporates many features of partnership and corporation, it cannot be considered similar to either. The unique set of advantages it offers due to its distinct corporate structure...