subject: Limited Liability Company [print this page] LLC's provide most of the benefits available through limited partnerships but, in addition, also provide limited liability protection to ALL of the LLC members. Certain advantages of an LLC over other entities include:
1. The LLC permits the individual to choose between entity-level [i.e., corporate] taxation and pass-through [i.e., partnership] taxation;
2. Utilizing a pass-through structure, the LLC can avoid the application of the mandatory provisions of the various States' paperwork-intensive corporation statutes;
3. Unlike limited partners, members of an LLC typically have no restrictions on their right to participate in control;
4. LLC statutes permit the owners to create an operating agreement for the management of the entity which is far less restrictive than the special close corporation statutes;
5. LLC members may choose to manage the entity themselves, or through managers some of whom may also be members of the LLC; and
6. Similar to limited partnerships, all state statutes require filing of an organization document, and, some require fairly substantial financial disclosures.
Some of the potential disadvantages of an LLC include:
1. Only a few states actually limit a creditor's remedy solely to a charging order. In most states a judgment creditor may obtain a judicial foreclosure and subsequent sale of the charged LLC membership interest; and
2. Numerous states may impose some type of tax or fee on LLC's. Such states may include: Alabama, California, Illinois, Kansas, Kentucky, Maine, New Hampshire, New Jersey, New York, Ohio, Pennsylvania, Tennessee, Texas, Washington and West Virginia.
If you believe you can benefit from a properly drafted LLC for you business or asset protection endeavors, then call us todayfor a free consultation. For more information visit professionalassetprotectionservices.
Limited Liability Company
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