Limited liability company

(redirected from LLC)
Also found in: Dictionary, Legal, Acronyms, Encyclopedia, Wikipedia.

Limited liability company (LLC)

A company that has characteristics of both a corporation and partnership. Like a corporation, it offers owners limited liability and like a partnership, taxation is at individual owner level rather than at corporate level.

Limited Liability Company

In the United States, a company with limited liability amongst its owners, that is, one in which a partner is not liable for more than his/her/its investment in case of insolvency. In other words, a co-owner of a limited company would lose the value of his/her investment if the company declares bankruptcy, but would not be held liable for other outstanding debts. A limited liability company is one of the most common corporate structures in the United States. It is designated by the letters "LLC" after its name.

A limited liability company is taxed as if it were a partnership, but has the ability to raise capital by acquiring new partners as if it were a corporation. However, because a limited liability company is not publicly-traded, it may have more difficulty raising capital than corporations. A limited liability company is designed to give at least some employees a share in the company's equity, while protecting them from potential losses. See also: Limited company.

Limited liability company.

Organizing a business enterprise as a limited liability company (LLC) under the laws of the state where it operates protects its owners or shareholders from personal responsibility for company debts that exceed the amount those owners or shareholders have invested.

In addition, an LLC's taxable income is divided proportionally among the owners, who pay tax on their share of the income at their individual rates. The LLC itself owes no income tax.

The limited liability protection is similar to what limited partners in a partnership or investors in a traditional, or C, corporation enjoy.

The tax treatment is similar to that of a partnership or S corporation, another form of organization that's available for businesses with fewer than 75 employees. However, only some states allow businesses to use LLC incorporation.

limited liability company

A cross between a corporation and a partnership, the limited liability company must be created by documents filed in the same place as corporations.This type of organization enjoys much of the informality of a partnership, the tax benefits of a partnership with all income taxed at the shareholder level but not at the company level (see double taxation), and the limited liability granted to corporate shareholders, who cannot be held personally liable for a corporate debt or transgressions. Be aware, however, that members of a limited liability company may well be safe from contractual claims against the company, but most claims for negligence or wrongdoing will include some theory of personal liability against the members also.

Example: A claim against a limited liability company may be for its negligence in allowing mud and water to remain on the floor, leading to a customer slipping and falling and sustaining back injuries. The plaintiff in such a case may claim the individual members were also personal- ly liable for their failure to develop policies and procedures to keep the floors clean or because they were also the employees and had personal responsibility to mop the floors.

References in periodicals archive ?
Asbell, CityScape Properties, LLC (Kansas City, MO)
For electing large LLCs, the statute of limitations (SOL) runs for three years from the later of the last day for filing the LLC's return or the date such return was actually filed.
SME Equipment LLC Sterlco, Division of Sterling Inc.
Innovatix Interactive Medical Developments LLC Key Rehabilitation Kindred Pharmacy Services Kindred Rehab Services McKesson Corp.
If an LLC member fails the general test simply because he or she participates in the partnership's trade or business more than 500 hours during the entity's tax year, the member still may be considered a limited partner if (1) he or she has only one class of interest and (2) immediately after acquiring that interest
Still, the LLC form is well-suited to many businesses.
Then, the IRS indirectly helped propel the LLC into contention when in late 1988 it ended a long period of uncertainty over how it would treat domestic LLCs by issuing Rev.
The LLC structure also avoids having to set up the additional general partner corporation, so administratively, there is only one entity per building, and only one tax return.
SKBA Capital Management, LLC (SKBA) serves as sub-advisor to a portion of the AHA Diversified Equity Fund.
If an LLC is required to register as a foreign LLC, the operating agreement should specify which state's law will govern the LLC's operations.
Generally, state laws provide that an LLC will dissolve on the death of a member or on some other triggering events, but they allow continuation of the LLC by unanimous consent of the remaining members.