A Limited Liability Company (LLC) is a business structure that combines the pass-through taxation of a partnership or sole proprietorship with the limited liability of a corporation. LLCs are popular because they provide owners with limited personal liability for business debts and other liabilities.
A limited liability company (LLC) is a business structure that combines the pass-through taxation of a partnership or sole proprietorship with the limited liability of a corporation. This type of business structure is popular among small business owners because it offers the flexibility of a partnership or sole proprietorship while providing the limited liability protection of a corporation.
An LLC is formed by filing articles of organization with the state in which the business will be located. The articles of organization must include the name of the LLC, the purpose of the LLC, the address of the LLC, the name and address of the registered agent, and the name and address of each member. The members of an LLC are the owners of the business and are responsible for the management of the LLC.
The LLC is a separate legal entity from its members, meaning that the members are not personally liable for the debts and obligations of the LLC. This limited liability protection is one of the main advantages of forming an LLC. Additionally, LLCs are not subject to the same double taxation as corporations, meaning that the profits and losses of the LLC are passed through to the members and taxed at the individual level.
The management of an LLC is determined by the operating agreement, which is a document that outlines the rights and responsibilities of the members. The operating agreement also outlines the rules for how the LLC will be managed, including how decisions will be made, how profits and losses will be distributed, and how disputes will be resolved.
Overall, an LLC is a popular business structure for small business owners because it offers the flexibility of a partnership or sole proprietorship while providing the limited liability protection of a corporation. Additionally, LLCs are not subject to the same double taxation as corporations, meaning that the profits and losses of the LLC are passed through to the members and taxed at the individual level.