- SIMILAR TO A PARTNERSHIP, BUT PROVIDES LIMITED LIABILITY FOR ALL
OWNERS (MEMBERS).
- MEMBERS DO NOT HAVE TO BE DIRECTLY INVOLVED WITH THE BUSINESS. THEY CAN APPOINT MANAGERS TO RUN THE COMPANY.
- OWNERS CAN PROTECT THEIR PERSONAL ASSETS WITHOUT HAVING TO BOTHER WITH MUCH RED TAPE. - LLCS ARE A HAPPY MEDIUM WHEN IT COMES TO COMPLEXITY AND REGULATIONS. THEY REQUIRE MORE PAPERWORK THAN A PARTNERSHIP, BUT LESS THAN A CORPORATION.
KEY FEATURES
A limited liability company or “LLC” is a useful hybrid between a partnership and a corporation. That being said, LLCs provide protection for personal assets and ownership flexibility without the regulations or complexity corporation.
LLCs are run by multiple owners (members), but they do not share personal liability for the business.
ADVANTAGES
Pooled Resources w/ Limited Liability – Members of an LLC can pool their resources like partners in a partnership, but they are not personally liable for one another. If the LLC is sued, members only risk losing what they have invested.
Flexible Management Structure – Members of the LLC can appoint managers to run the company on their behalf. This means a member does not have to be directly involved with the business the way a partner would. Managers can be actual people or even other businesses.
Less Red Tape – LLCs generally have less paperwork and regulation expenses than a corporation, yet still benefit from limited liability.
DISADVANTAGES
Some Complexity - While LLCs have less red tape than a corporation, they do have more formal requirements and formation expenses than a partnership or a sole proprietorship.
TAXATION
Flexibility - By default, an LLC is taxed like a partnership. The business itself is not taxed, the business income is divided between the owners who report their portion on their personal taxes. LLCs can also choose to be taxed as corporations if it's to their advantage.
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