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.

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 ?
An operating agreement can help control the business, specifying who has authority to make management decisions.
NAMCOR signs two Joint Operating Agreements with French gas and oil company Maurel & Prom Namibia S.
Secondly, however, if your operating agreement doesn't already provide that oral and implied amendments of it are invalid, you need to add this provision to it.
So long as the provisions of the operating agreement are not unconscionable or against public policy, they may establish the standards by which the performance of this obligation is to be measured.
Observation: The importance of clear and concise allocation provisions in an operating agreement was highlighted in a recent court case.
An operating agreement is not strictly required for an LLC in Oregon, but without one the rights of the members are controlled by default provisions of the Oregon statutes.
Mike is a great leader and successful business owner who understands the need for entrepreneurs to have access to high quality, cost effective LLC Operating Agreements, which is exactly what MyLLCAgreement.
The language of the act is permissive rather than mandatory: "All members of a limited liability company may enter into an operating agreement to regulate the affairs of the company and the conduct of its business and to govern relations among the members, managers and company.
In Ehmann, the court analyzed the duties owed by a bankrupt member to the LLC to determine whether the operating agreement was an executory contract.
Joint Operating Agreement in connection with Lukoil's purchases.
To qualify for the gift tax exclusion, the operating agreement must allow for transferred units to have immediate value to the donees.
When a report emerged that the Sparks were in danger of losing their operating agreement if attendance didn't rebound, Buss said he was stunned.