Forming a Limited Liability Company or LLC
A Limited Liability Company, or LLC, can be thought of as a hybrid between a Partnership and a Corporation. Limited Liability Companies provide the flexibility of operations, like a partnership, combined with the limitation of personal liability on its owners as in a corporation. Limited Liability Companies have been in existence for less than twenty years. They were created in order to provide owners with a business form that works well in our modern business environment.
As the owner of a Limited Liability Company, you have the ultimate in management flexibility. You can choose to be Manager-managed or Member-managed. You can create your own management positions in a Limited Liability Company and fill them with owners or outside managers. Unlike limited partners in a limited partnership, Members of a Limited Liability Company can, and often should, participate in management.
Limited Liability Companies also offer the ultimate in tax treatment flexibility.* By default, your Limited Liability Company will be taxed as a proprietorship (if you only have one owner) or a partnership (if you have multiple owners) and will avoid the “double taxation” of a C-Corporation. But, you can also choose to have your Limited Liability Company taxed as a C-Corporation or an S Corporation. To better understand the differences between an LLC, C Corp and S Corp, be sure to review our comparison page.
All of this flexibility comes in a package that provides you with a strong shield to protect you from outside creditors and from inside liabilities**.
* Consult your tax advisor for the tax treatment that is most beneficial for you and your LLC.
** LLCs can provide you with protection in the event that your personal liabilities jeopardize your ownership of your LLC.
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