Limited Liability Corporation
A Limited Liability Company is a legal Business Company that provides limited liabilities to their owners. It is identical to that of a corporation and has a very flexible type of ownership that is generally suitable for the small companies having limited owners. A Limited Liability Company is well organized with the necessary documents called the Articles of Organization that are publicly specified by the state. It also has an operating agreement which is a contract between the members of the company and the Limited Liability Company governing the operation, management, membership and income distribution of the company.
The Limited Liability Company has some benefits associated with it. It does not require yearly meetings for the share holders and the board of directors never loses their power. The record keeping and the administrative work is upto a minimum. It uses the default tax classification. The profits of the company are taxed personally at individual levels and not at the company's level. But, in a Limited Liability Company sometimes it becomes difficult to raise the funds. Because investors are more relaxed if they invest the funds in a proper corporate form. The possible solution for this is forming a new corporation and getting merged into it.
In short, we can say that a Limited Liability Company is simple to form and easy to run. You have better tax advantages as well as protection from liabilities. It gives you instant credibility. It is entirely a new way of doing your business. In this business, the owners are referred to as the members of the company and not the partners or the stockholders.
A Limited Liability Company is a combination of some features of the corporation, some of the sole proprietorship and some of the partnership. It functions individually like that of a corporation, but are just entitled like a partnership to get the benefits of taxation. The Limited Liability Company is a very flexible business that is easy to run. The people who are exposed to debts or lawsuits arriving from their business should consider forming a Limited Liability Company. Running your business as a Limited Liability Company provides you personal protection and security against the potential claims against your business. It is not so that every business can be operated like a Limited Liability Company. There are some states that prohibit the doctors, accountants, architects, insurance industry, banking from forming a Limited Liability Company.
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