What is a LLC?

What is a LLC?

A Limited Liability Company (LLC) is a legal business entity that limits the company’s members from risk of loss. This means that the private assets of an LLC’s owners and members are protected if the company fails, and only the amount they have invested in the company is at risk. Similar to an S corp, LLC’s also avoid double taxation. LLCs are established by filing articles of incorporation and are subject to state regulations, which vary state-to-state. The owners of an LLC are usually referred to as “members,” as the structure is more of a hybrid between a corporation and a partnership or sole proprietorship. States determine what types of entities can be part of an LLC; not all types of organizations can become members. Most states do permit a “single-member” LLC, or those having only one member. Because these structures are so specifically regulated by states, it’s important to consult with the Secretary of State’s office, as well as a good accountant and lawyer, for more information before choosing this option.

 

NEXTSTEPS | 1.16.21

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