2007-11-11 18:15:36 · 5 answers · asked by Nyte 2 in Business & Finance ➔ Corporations
A Limited Liability Company (LLC) is created and regulated under state laws. An LLC is allowed to possess the limited liability characteristics of a corporation, but is treated as a partnership for federal tax purposes. A major advantage to an LLC is the same tax pass-through feature of an S Corporation. Furthermore, they offer the flexibility of a partnership without the restrictions of an S Corporation. They can have more than one class of stock, the number and type of members are not limited and there is flexibility in profit/loss allocation.
They also offer limited liability protection for all members. Any LLC member can participate in management without being exposed to personal liability. Contribution of property to an LLC is tax-free regardless of how much control the contributing partner has. Liquidation of an LLC is generally a tax-free event, and they are not required to file annual reports with Arizona Corporation Commission.
Disadvantages are that an LLC must have two members to file as a partnership for federal tax purposes (a single-member LLC files as a sole proprietor), earnings are generally subject to self-employment tax, state law may limit the life of an LLC, conversion of an existing business to LLC status could result in tax recognition on appreciated assets, and fringe benefits to partners are taxable.
Also, there is a lack of uniformity in LLC statutes between states. A firm operating in more than one state may not get consistent treatment.
2007-11-11 23:15:36 · answer #1 · answered by Sandy 7 · 1⤊ 0⤋
I'm a big fan of the properly formed LLC. It is, as it was intended, a hybrid combining the best qualities of a corporation and a partnership. easy to manage with good liability protection.
2007-11-12 00:30:13 · answer #2 · answered by jimmy dean 3 · 0⤊ 0⤋
my business is an LLC. Definately a plus! an LLC protects your personal assets in case your business is sued. if you dont go LLC, then potential creditors can go after your home, property, bank accounts, etc.
2007-11-11 18:19:12 · answer #3 · answered by GG 7 · 1⤊ 0⤋
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2016-10-02 04:23:23 · answer #4 · answered by rawson 4 · 0⤊ 0⤋
It limits owners liability and has lowest amount of disadvantages
2007-11-11 18:19:48 · answer #5 · answered by Earth to Mars 5 · 0⤊ 0⤋