Limited Liability Corporation

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What Are Limited Liability Companies – LLC’s?
A Limited Liability Company (LLC) is a hybrid between a Corporation and a Partnership. An LLC provides the liability protection of a Corporation with the pass-through taxation of a Partnership. Limited Liability Companies are becoming popular due to their flexibility in management and the personal liability protection offered to their members.

While LLCs don’t provide many of the same fringe benefits as a Corporation, the flexibility and simplicity of ownership makes them the ideal tool for a small company looking for liability protection.

The owners of an LLC are called members and they work in a similar capacity as the shareholders of a Corporation. The members buy interest in the LLC with cash, property or the promise of payment.

LLCs have far fewer restrictions on membership than an S-Corporation has on shareholders. LLCs also allow members to participate in management of the LLC without losing their protection from liability, whereas a limited partner in a Limited Partnership does not have this benefit.

Corporations can even be a member or manager of an LLC. This allows greater flexibility than an S-Corporation which places restrictions on the number of shareholders and who can be a shareholder.

Ownership:
LLCs are owned by the Members, similar in scope to shareholders in a Corporation. LLCs can be managed by its members, they may choose to have a professional manager or they can make one of the members a manager. When you form an LLC you will be asked if you want to be “member managed” or “manager managed”. Members can be individuals or other entities, such as a Corporation.

Tax:
An LLC can be structured to be taxed as either a “pass-through” entity or as an association that pays its own taxes.

Asset Protection:
Members of an LLC have the same liability protection as shareholders of a Corporation. 

Quick Benefits List:
Asset Protection
Tax Savings
Flexibility of Management

Disadvantage:
The main disadvantage of LLCs is that their use is relatively new in the United States, so there is no uniformity in the laws that govern them between individual states. 

Uses: 
Holding Real Estate
Trading Accounts
Operating Business