Advantages of A Limited Liability Company (Llc)


The LLC may be treated as a partnership or sole proprietorship for U.S. income tax purposes and also provides the limited liability of a corporation. This option may be the preferred choice for certain newoperations and joint ventures. Owners of LLCs are called ìmembers.î These are comparable to stockholders in a corporation or limited partners in a limited partnership. To create a LLC, Articles of Organization are filed with the Secretary of State, Bureau of Commercial Services, Corporation Division. The LLC must have an operating agreement. The operating agreement is a written agreement by the member of a limited liability company that has 1 member, or between all of the members of a limited liability company having more than 1 member, pertaining to the affairs of the limited liability company and the conduct of its business. If an LLC fails to adopt an operating agreement, the member or members will be unable to take full advantage of the benefits of forming an LLC and default provisions in the act will determine distribution and voting rights.

Advantages
Limited liability
Tax advantages
Lower start-up costs than a corporation

Disadvantages
Transfer of ownership more difficult than a
Corporation

Filing procedures vary from state to state

Newest form of business structure and some
persons or practitioners may not be completely
familiar with proper organization and operating
issues of a limited liability.