A, also known as an , is a type of that combines of both a and a . An LLC is eligible for the of a or , while at the same time limiting the of the , similar to a corporation. As the LLC is not considered a separate , the does not or take on . Instead, this is done by the owners as they have to the , or losses, on their . However, just like , of an LLC are protected from , thus the name .
Limited Liabilityare recognized in all 50 and the of Columbia. In most states any type of business can an LLC, though some state may require at least two members in order to form one.
Advantages of an LLC
- The members of an LLC have against liability. They cannot be for company losses, or and , and their personal (such as a or car) cannot be recovered by the .
- have the of selecting any form of , which does not have to be in the of the between different members.
- LLCs do not have a requirement to formal meetings, maintain of the , or .
- similar to a corporation are available without going through any formalities.
- Pass-through apply and the company itself is not taxed unless it for being treated as a regular corporation. All business profits, losses, and are accounted for by its members. Members have to show the in their and accordingly pay taxes. This allows the of by way of along with the individual .
Disadvantages of an LLC
While the advantages largelymost , certain aspects of an LLC can prove to be disadvantageous. This is especially true for larger . Some of the disadvantages of an LLC are:
- LLCs have a limited life and are usually dissolved when a member , or if the company .
- LLCs cannot go , as there are no or shareholdings. For the same reason, issuing shares to through is not possible.
- Even though the and the associated with LLCs are significantly less than those for forming a corporation, its formation is still substantially more than a partnership or sole-proprietorship.
In most states, an LLC can be created simply bythe "articles of organization" and paying the required filing . This is also known as a "certificate of organization" or a "certificate of formation". Some states have an additional requirement of publishing an to create an LLC in a newspaper. Another part of forming an LLC is the , which is not in most states, but is highly recommended. This document explicitly states the and of the LLC owners.