LIMITED LIABILITY COMPANIES; IN 3 PARTS- GOOD , BAD AND THE UGLY
PART 1, THE GOOD:
1. Much less administrative paperwork and record keeping than a Corporation:
2. Pass-through taxation, no double taxation, unless the LLC elects to be taxed as a "C" Corporation
3. Limited liability, meaning that the owner of the LLC, called "members", are protected from some liability for acts and debts of the LLC, but are still responsible for any debts beyond the fiscal capacity of the entity;
4. Check-the-box-taxation. The LLC can elect to be taxed as a sole propreitor, partnership, "S" Corporation or "C" Corporation, providing much flexibility;
5. LLC's can be set up with just one member;
6. Membership interests of LLCs can be assigned and the economic benefits of those interests can be separated and assigned providing the assignee with the economic benefits of distribution of profits/losses, like a partnership, without transferring the title to the membership interest- Virginia and Deleware LLC acts..
7. LLCs in most states are treated as entities separate from there members, whereas in other jurisdictions case law has developed deciding LLC's are not considered to have separate standing from there members:
8. Unless the LLC has chosen to be taxed as a Corporation, income of the LLC generally retains it character. for instance as capital gains or as a foreign sourced income, in the hands of members
9. Presents an alternatiove to "S" Corporations
10. Owners of mult-member LLC may avoid Social Security Taxes, and
11 For single member LLC's it provides the opporturnity toi keep the most simple of business organization in place while providing limited liability for the business owner.
LIMITED LIBILITY COMPANIES DO NOT HAVE LIMITED LIABILITY. LLC'S CAN SUE AND BE SUED. THE MEMBERS OF THE LLC HAVE THE LIMITED LIABILITY TO THE CAPITAL INVESTMENT THAT IS MADE INTO THE LLC.
NEXT WEEK, PART 2 THE BAD.
PART 1, THE GOOD:
1. Much less administrative paperwork and record keeping than a Corporation:
2. Pass-through taxation, no double taxation, unless the LLC elects to be taxed as a "C" Corporation
3. Limited liability, meaning that the owner of the LLC, called "members", are protected from some liability for acts and debts of the LLC, but are still responsible for any debts beyond the fiscal capacity of the entity;
4. Check-the-box-taxation. The LLC can elect to be taxed as a sole propreitor, partnership, "S" Corporation or "C" Corporation, providing much flexibility;
5. LLC's can be set up with just one member;
6. Membership interests of LLCs can be assigned and the economic benefits of those interests can be separated and assigned providing the assignee with the economic benefits of distribution of profits/losses, like a partnership, without transferring the title to the membership interest- Virginia and Deleware LLC acts..
7. LLCs in most states are treated as entities separate from there members, whereas in other jurisdictions case law has developed deciding LLC's are not considered to have separate standing from there members:
8. Unless the LLC has chosen to be taxed as a Corporation, income of the LLC generally retains it character. for instance as capital gains or as a foreign sourced income, in the hands of members
9. Presents an alternatiove to "S" Corporations
10. Owners of mult-member LLC may avoid Social Security Taxes, and
11 For single member LLC's it provides the opporturnity toi keep the most simple of business organization in place while providing limited liability for the business owner.
LIMITED LIBILITY COMPANIES DO NOT HAVE LIMITED LIABILITY. LLC'S CAN SUE AND BE SUED. THE MEMBERS OF THE LLC HAVE THE LIMITED LIABILITY TO THE CAPITAL INVESTMENT THAT IS MADE INTO THE LLC.
NEXT WEEK, PART 2 THE BAD.