Limited Liability Corporation 2018-03-16T20:31:03+00:00

Limited Liability Corporation

A hybrid of all other business entities, Limited Liability Companies, or LLCs, were created to provide business owners the liability protection of corporations while avoiding double taxation by allowing earnings and losses to pass through to the owners for filing on their personal tax returns.

Advantages

  • Single or multiple owners are allowed a full participatory role in operations of the business.
  • Your only risk is capital paid into the business. Your personal assets are protected from seizure in the case of any company debt or legal claims that may be filed against the company, unless you have personally guaranteed a debt.
  • No separate tax return for the business. All taxes are filed on the individual tax returns of the owners.
  • A “member” (which is the equivalent of a shareholder) can be a person, partnership or corporation. All members receive a percentage of ownership in the company.
  • Proportional distribution of profits and losses isn’t required based on the financial stake each person has in the company.

Disadvantages

  • No stock may be issued.
  • Members cannot supply themselves or their employees fringe benefits or major incentives.
  • Paperwork can be burdensome. LLCs must file articles of organization with the State Corporation Commission or Secretary of State and draft an operating agreement listing the rights and responsibilities of all members.
  • LLCs do not have a perpetual life.

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