Limited Liability Company
Limited liability companies are rapidly growing in popularity. Now authorized in the fifty states and the
District of Columbia, these companies are an attractive organizational alternative well suited to serving
the needs of many businesses and their owners.
In this guide, we answer some of the many questions you may have about limited liability companies.
By necessity, our answers are framed only in very general terms. For more details as to how any of this
information may apply to your specific situation, be sure to consult with us. We can address your
questions and concerns in the context of your particular business situation and applicable state law.
WHAT IS A LIMITED LIABILITY COMPANY?
A limited liability company, or LLC, is a form of business organization that combines certain features of a
corporation and a partnership. Like a corporation, a properly structured LLC protects its owners (called
"members") from personal liability for the debts and obligations of the organization. When all applicable
tax law requirements are met, however, an LLC is taxed as a partnership instead of as a corporation for
federal income-tax purposes. In the right circumstances, this combination of limited liability and
partnership tax treatment can be highly advantageous to the LLC's owners.
HOW IS AN LLC FORMED?
Generally, an LLC is formed pursuant to state law by filing a public document known as the "articles of
organization." An operating agreement spelling out the arrangements agreed to by the members usually
supplements the articles of organization.
WHAT KINDS OF BUSINESSES MIGHT BENEFIT FROM OPERATING AS AN LLC?
Many tax and nontax factors can affect the choice of the best way to structure a business. Although LLCs
are worth considering whenever limited liability and partnership taxation are sought, they may be
particularly attractive for family businesses that have substantial exposure to product or other liability, for
real estate investment, and f