Limited Liability Company Info

LLC Information & FAQs

What is a Limited Liability Company?

A Limited Liability Company (LLC) is similar to a corporation in that it is a legal entity that can conduct business under it’s own name. When operated and maintained properly the owners (members) of the LLC can not be held personally liable for it’s debts and liabilities. This means that the members personal assets are protected and they will not be required to settle any company debt or court judgments against the LLC with their own money.

Pass Through Tax Advantage

The advantage of forming as an LLC is that it combines the personal liability protection of a corporation with the pass through taxation of a sole proprietorship or partnership. A limited liability company’s income or loss is passed directly to the members and is reported on their personal tax returns.

Simplicity of Organization & Operation

LLCs require relatively few organizational and administrative formalities when compared to corporations. They do not have to hold annual meetings and are allowed to set up the business structure as the members see fit.

No Restrictions on Ownership

There are no restrictions on who can own interest in an LLC. They can be owned by individuals, corporations, partnerships or other entities. Further, there is no requirement that an owner be a US citizen.

What is a member of an LLC?

A member is a person or entity that owns a percentage of interest in the LLC. Members of an LLC are similar to shareholders of a corporation.

How many members can an LLC have?

An LLC can have one member or it can have many members.

How is an LLC structured?

The members can set up the structure of an LLC as they see fit. The members can manage the day to day operations of the company or they can select a manager run the business. The manager can be a member of the LLC or a person or company outside of the LLC.

What is an operating agreement?

An operating agreement is agreement between the members of an LLC that spells out how the LLC will conduct it’s business. It outlines such things as privileges of membership, management structure and handling of distributions.