Limited Liability Company has
the advantage of being a hybrid
between a partnership and a Corporation. The
advantage of a Limited Liability Company is that
most states require fewer formalities be
observed in an LLC in comparison to a
This type of corporation blends the tax
advantages of a partnership and the limited
liability advantages of a corporation. Owners of
an LLC are referred to as "members." As you
might expect, it also has some limitations but
is definitely worth considering.
Limited personal liability for the owners (like a
corporation and unlike a partnership).
No Federal taxes (like a partnership).
No limit on the number of stockholders (unlike an
More than one class of stock is permitted (unlike an
Business losses may be deducted on your personal tax
return (like a S-corporation).
Legal assistance is required to set up. The paperwork is
No "continuity of life" as in a regular corporation. The
LLC dissolves if one of the owners dies or otherwise
leaves. However, other formal agreements between the
owners can overcome this.
Some states require than an LLC have more than one
LLC Meetings While many states do not
require that your Limited Liability Company hold
meetings on a regularly scheduled basis, it's
always wise to conduct meetings with your
members to ensure the LLC is in agreement in all
Opening a Bank
Account Most banks require only a copy of your Articles
of Organization and your federal Employer ID
Number to open a bank account. Some, however,
may also require a resolution passed by the
Limited Liability Company's members and a copy
of the LLC Operating Agreement before opening an
account. To better determine your bank's
requirements, you should contact the branch
manager and ask about their requirements for New
Advantage One LLC Member
Required. Historically, most states require that
a Limited Liability Company be comprised of at
least two LLC members. Today most states and the
IRS recognize the single-member LLC as a
legitimate business structure.
Separate Legal Entity Like
limited partnerships and corporations, the
Limited Liability Company shares a similar
advantage -- it is recognized as a separate
legal entity from its "members."
LLC Management and Control
Management and control of an LLC is vested with
its members unless the Limited Liability
Company's articles of organization provide
voting interest in an LLC directly corresponds
to interest in profits, unless the articles of
organization or operating agreement provide
Transferability No one can
become a member of an LLC (either by transfer of
an existing membership or the issuance of a new
one) without the consent of members having a
majority in interest (excluding the person
acquiring the membership interest) unless the
articles of organization provide otherwise.