Business Entities at the State Level: Limited Liability Companies
This week our blog will shift its focus to limited liability companies (LLCs). We will discuss how an LLC is organized, how it works, and who would benefit most from filing their business as an LLC. This blog may make references to series LLCs, but that topic will be discussed at greater lengths next week.
Individuals on behalf of a limited liability company are called “Members” or “Managers”. Every LLC must be either “member-managed” or “manager-managed” depending on the text of the LLC’s operating agreement. Obviously, member-managed LLCs are ran by the members while manager-managed LLCs are ran by the managers. The LLC’s name speaks for itself; there is a limit to the liability of members and managers, which is, their contribution to the company. Individuals can further limit their liability with a Series LLC. LLC’s are afforded flexibility with regards to taxation in that an LLC can choose to file in various ways in accordance with IRS standards.
An LLC is a great choice for a business entity because of the legal protection it provides, the ability to enhance a company’s credibility in order to obtain funding, and some states, such as Delaware, provide anonymity for members/managers of an LLC. However, most states require diligent record keeping and filing fees are often more expensive for an LLC. A limited liability company can be filed with a respective Secretary of State. If you have any other questions about whether filing a limited liability partnership is right for you, the professionals at The Center for Financial, Legal and Tax Planning are more than well-equipped to answer your questions. Please contact us at (618) 997-3436.