Definition of an LLC
LLC Definition - a type of business structure that provides its owners limited liability.
Though it bears similarities to both, it is neither a corporation nor a partnership. Therefore, the owners of an LLC are neither a shareholder nor a partner. Rather, they are called members. Nevertheless, you can find in an LLC the combination of the best characteristics of a corporation and a partnership. An LLCs member can be any person, partnership, other LLCs, corporations or other foreign entities.
What is an LLC to those who are quite concerned with taxes? What is an LLCs advantage over the other types of business forms?
Just like a corporation, a limited liability company offers its owners protection from any personal liability from the business debts. What makes it better is that it is a pass-through entity with regards to tax, something a corporation is not. Being a pass through entity means it can pass through to its owners the companys profits as well as losses. They will then reflect these on their personal tax returns just like how it is done in a partnership or a sole proprietorship. Just like with partnerships, LLCs provide greater flexibility for the companys management.
What is an LLCs structure? What is an LLCs requirement?
A limited liability company can have as many members as it wishes to have. The laws of each state even allow LLCs with only one owner called single member. Forming one does not require the need for bylaws, meetings and the meetings recording just like in a corporation. Instead, an Articles of Organization should be filed with the Secretary of State in order for the LLC to be set up. The Articles of Organization should be according the states particular guidelines. Along with this, pertinent fees should also be paid. This process makes an LLC a statutory creation.
What is an LLCs history? When did it come about?
LLCs can be considered to be new in the United States business scene since its popularity only came about in the 1990s. However, LLCs already existed in Europe way before that. It was formally adopted in Wyomings legislature in 1977. It was already in 1982 that a second state in the USA, in Florida, that an act of LLC was enacted. Acceptance was not immediate, in fact slow. It however snowballed in the 1990s when all states passed statutes allowing the formation of LLCs.
The existence of limited liability companies provided businesspeople with an additional alternative in their choices of business structure that will most fit their need, Now that you know an LLC definition, it is now easy to determine if this is the best choice for you. FinishLine Tax Solutions will provide the expertise necessary to properly set up your LLC. We will carry the process from start to finish which will allow you to take confidence in knowing that your business orientation is established in a manner which is consistent with all appropriate local, state and federal laws. We will work on setting up your business so that you may focus on growing your business.