• An LLC is a business entity that shares some of the more beneficial aspects of corporations and limited partnerships and yet has more flexibility than these more traditional business entities
• The business itself is a distinct, legal entity which can enter into contracts, acquire assets, take on debt, have checking accounts, sue and be sued, and survive beyond the death of its founders or owners. Members (owners) of an LLC, like the shareholders of a corporation, generally are only personally liable for the debts and liabilities of the LLC to the extent of their capital contribution.
• Since it is a business entity separate and distinct from an owner's personal interests, both your family and your business are protected. Personal credit ratings and legal proceedings against individual owners do not adversely affect the health of the business. Likewise, as an owner, your personal assets and interests are generally shielded from claims arising out of the conduct of the business.
• Just as in a partnership, the members can decide how to allocate the profits and losses, and thus, the tax liability, among themselves. An LLC with two or more members will default to pass-through taxation status like a partnership where income is taxed once at the member level. Or the business can elect to be taxed as a corporation (via an Entity Classification Election) and thereby be subject to double taxation, once as income to the business and again as income to the owners. A single member LLC will default to sole proprietorship tax status.
• In addition, the members may manage the LLC themselves or choose to appoint managers and delegate management of the LLC to them
• Owners may also impose limits on transferability of ownership interests by listing them as such in the articles of organization
• Also, there are fewer formalities required to operate and maintain the entity in good standing
• Both state and local agencies in your state may require that your firm obtain a license or pay a fee to operate in the state. Please check with the appropriate/regulating agency to make sure your business is complying with the requirements of your particular profession.
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Management and Control: LLCs have greater flexibility in management and organization than other firms. Terms of this flexibility are defined in the firm's operating agreement. This is an agreement made between the members (owners) of the LLC and determines how the firm's business will be conducted. This agreement is similar to the bylaws of a corporation with some characteristics of a partnership agreement. It is generally established at the organizational meeting, which should be held shortly after the Secretary of State approves the Articles of Organization. The Operating Agreement sets the rules for management of the company as well as the rights and responsibilities of the members (owners). The members may manage the LLC themselves or choose to appoint managers and delegate management of the LLC to the managers. A member of the LLC can also act as a manager or a group of members can act as managers.
A limited liability company is an unincorporated business entity that shares some of the aspects of S Corporations and Limited Partnerships, and yet has more flexibility than these more traditional business entities. The LLC is a fairly new type of business entity that is designed to allow the members to choose to be taxed like a partnership but offer its members limited liability like that enjoyed by the shareholders of a corporation. Members may also choose to be taxed as a corporation or a sole proprietorship.

Limited Personal Liability: The members (owners) and managers of an LLC, like the shareholders of a corporation are, generally, personally liable for the debts and liabilities of the LLC only to the extent of their capital contribution.

Distributions: As in a partnership, the members decide how to  allocate the income and losses, and thus the tax liability among themselves. Amounts paid out to members, which are not guaranteed, are considered distributions.

Taxation: Default taxation for an LLC is pass through taxation. An LLC with just one member defaults to sole proprietor tax status and LLCs with two or more members defaults to partnership tax status. However, LLC can elect to change from their default tax status to corporate tax status, by petitioning the IRS for an entity classification election. To make this election, the business entity seeking a change in status must already have received or applied for its own employer identification number.
In order to avoid any revocation of pass-through tax flow status, the organization should involuntarily dissolve upon the execution of specific events. Members are taxed on their share of the income, regardless of distributions, partners may deduct active losses to the extent of the partnership basis.

Transferability of ownership: Subject to approval by other members; operating agreement restrictions may limit the possibility. Multiple classes of ownership interests are permitted.

Formation: Must file articles of organization which are similar to the Articles of Incorporation a corporation must file. Organizers must file the Articles of Organization with the appropriate state agency. The requirements of the Articles of Organization are set out in state statutes.

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