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Limited Liability CompanyC

Advantages

      • Most Popular
      • Very Flexible for membership
      • Least costly
      • No personal liability for LLC debts
      • Simplest tax filings and tax preparation
      • Income taxed only once at individual tax rates


Disadvantages

      • Not as well known or understood as corporations
      • Formalities of regular meetings and minutes recommended

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Overview

A “limited liability company” (“LLC” for short) is a business entity created by one or more owners (“members” in LLC parlance) under state laws to conduct one or more lawful businesses. An LLC with only one owner is referred to as a “single-member LLC” and an LLC with more than one member is referred to as a “multiple-member LLC.”  Every state now permits the formation of LLC’s. The laws are generally similar from state to state but there are variances. An LLC is a separate legal entity from its owners/members and its owners/members are generally not personally liable for the debts of the LLC so long as its formalities are followed. An LLC is governed by its member(s) or by its member-manager(s) in accordance with the terms of its Articles of Organization and its Operating Agreement (or applicable state laws if there is no Operating Agreement). LLC’s are created by filing its Articles of Organization with the applicable state. Annual reports must be filed each year (usually at the anniversary of the formation your company or a date designated by the state) to avoid late fees and eventual administrative dissolution. Generally, an LLC must register as a “foreign entity” if it conducts business in states other than its state of organization. See the FAQ page for a discussion of the tax considerations applicable to LLC’s.

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