Limited Liability Companies
Limited Liability Companies, or LLCs, are one of the fastest growing types of new business organizations, and one that Smith Rayl Law Office knows well.
A limited liability company is often viewed as a hybrid of a corporation and a partnership. As with a partnership, forming and operating a limited liability company is relatively simple, with few required formalities.. As with a corporation, the owners of an LLC are generally protected from personal liability for the business's debts and obligations.
An LLC is often a good choice for a small, statup business because it offers flexibility on a lot of fronts. If the LLC has a single member, it can treated as a "disregarded entity" for income tax purposes, which means no tax return has tax return has to be filed. The income and losses are reported directly on the owner's personal tax return, exactly as if the business were a sole proprietorship. Alternatively, the LLC can elect to be taxed as either a Subchapter C or a Subchapter S corporation. If the LLC has more than one member, it can be taxed as a partnership or it can elect to be taxed as a corporation, either under Subchaper C or S.
Similarly, an LLC offers a wide range of management structures. It can be managed directly by the members, much the same way as a sole proprietorship or many general partnerships are managed. Alternatively, it can be managed by one or more managers. That's a good choice if the members do not want to be actively involved in the day to day business operations, but that's not the only reason. For example, a sole business owner may choose to set up a manager-managed LLC and name herself as manager. That gives her the alternative to later assign the management responsibilities to someone else or to name an alternative manager to take over the operations when she is unavailable or incapacitated.
If you're starting up a new business -- or even if you have an existing business and want to review the way it's organized -- please consider making an appointment with us to discuss it.