Limited liability company

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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.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

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.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.

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.

The Complete Real Estate Encyclopedia by Denise L. Evans, JD & O. William Evans, JD. Copyright © 2007 by The McGraw-Hill Companies, Inc.
References in periodicals archive ?
On date 2, the Founders sold all of their Class B membership interests in Partnership to Distributing 1 in a taxable transaction.
Similarly, clients might also want to consider recapitalizing the LLC so that the membership interests are bifurcated into voting and nonvoting membership interests.
According to the agreement, the manager had to give his permission for a member to withdraw or transfer his or her membership interest. If the manager did not approve a transfer, the transferee would lose voting and membership rights.
Provisions in these two acts could apply to the purchase or sale of membership interests in risk retention groups.
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Shell Midstream acquired 75% of the issued and outstanding Amberjack Series A membership interests and 50% of the issued and outstanding Amberjack Series B membership interests in May, which was the partnership's largest acquisition to date.
Under the transaction, JFC will invest for 47 percent of the fully-diluted membership interests in Tortas Frontera LLC, which owns the Tortas Frontera business founded by Bayless.
Elevation Financial Group, LLC said it has closed on the acquisition of all Class B investor membership interests in two of its early stage private equity real estate funds, Elevation Real Property Fund II, LLC and Elevation Real Property Fund III, LLC ("Fund III").
Middleburg Financial Corporation (NASDAQ: MBRG), has said that its wholly-owned banking subsidiary, Middleburg Bank, has agreed to sell all of its membership interests in its majority-owned subsidiary, Southern Trust Mortgage.
Pearson has agreed to invest USD89.5m in cash in NOOK Media, at a post-money valuation of approximately USD1.789bn in exchange for preferred membership interests representing a 5% equity stake.

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