Todd W. Cline, P . A .
A T T O R N E Y & C O U N S E L O R A T L A W
101 N MCDOWELL STREET, SUITE 220 ● CHARLOTTE, NC 28204
TEL: (704) 334-7779 ● FAX: (704) 334-7778 ● CAROLINATTORNEY.COM
THE ADVANTAGE OF A LIMITED LIABILITY COMPANY
A Limited Liability Company (LLC) 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 the entity to observe fewer formalities than a corporation.
Advantage: One LLC Member Required. Historically, most states required that at least
two members comprise an LLC. North Carolina and the IRS recognize the single-
member LLC as a legitimate business structure.
Separate Legal Entity: Like limited partnerships and corporations, the LLC shares a
similar advantage – it is recognized as a separate legal entity from its “members.”
Limited Liability: Ordinarily, only the LLC is responsible for the company’s debts, thus
shielding the members from individual liability. However, there are some exceptions,
where North Carolina law may hold individual members liable:
• Guarantor Liability: Where an LLC member has personally guaranteed the
obligations of the LLC, he or she will be liable. For example, where an LLC is
relatively new and has no credit history, a prospective landlord about to lease
office space to the LLC will most likely require a personal guarantee from the
LLC members before executing such a lease.
• Alter Ego Liability: Very similar to the judicial doctrine applied to corporations
-- a court may hold the individual share holders liable where the business entity is
merely the “Alter Ego” of its shareholders, a member of an LLC also may be held
liable for the LLC’s debts if the court imposes its “alter ego liability” doctrine.
LLC Management and Control: Management and control of an LLC is vested with its
members unless the articles of organization and operating agreement provide otherwise.
Voting Interest: Ordinarily, voting