What Is LLC - LLC Definition
What is LLC and what makes it popular nowadays?
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 not a shareholder or 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 LLC’s member can be any person, partnership, other LLCs, corporations or other foreign entities.
What is an LLC to those who are quite concern with taxes? What is an LLC’s 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 company’s 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 company’s management.
What is an LLC’s structure? What is an LLC’s 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. This Articles of Organization should be according the state’s particular guidelines. Along with this, pertinent fees should also be paid. This process makes an LLC a statutory creation.
What is an LLC’s 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 Wyoming’s 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 businessmen with an additional alternative in their choices of business structure that will most fit their need, even capital. Now that you know an LLC definition, it is now easy to determine if this is the best choice for you. The internet can provide you with information and instructions on how it can be easily set up is readily available. Online business advisors can also give you the proper orientation you may need and even do the setting up of an LLC for you.