We recently had the opportunity to answer legal questions regarding limited liability companies (LLCs) in New North Business Matters, a monthly business to business publication serving northern Allegheny and southern Butler Counties. Eight thousand copies are mailed to business leaders, decision makers and executives each month. We hope the answers we provided about LLCs will be helpful to you as your plan to launch your next business.
Question: How is a limited liability company different from a partnership or corporation?
Answer: A Limited Liability Company (LLC) is different than a partnership because a general partner is not required for an LLC to operate. In addition, unlike limited partners in a limited partnership, the members of an LLC can freely manage the company without risk of personal liability. An LLC is different from a corporation because it does not have a board of directors, but instead is member or manager-run. Unlike a corporation, an LLC is not required to hold the annual meetings and keep minutes of those meetings. Another difference from a corporation is that an LLC is not subject to a double tax. A double tax occurs when the corporation’s profits are taxes and then once the profits are distributed to the shareholders, the shareholders are personally taxed on those profits.
Question: What are the benefits of an LLC?
Answer: An LLC has four basic benefits: limited liability, partnership taxation, management rights, and protection from creditors. The owners of a limited liability company are the members and the members, managers, or both can manage an LLC. In addition, it is relatively easy and cost effective to form an LLC in Pennsylvania.
Each business entity option has advantages and disadvantages, so be sure to examine the characteristics of each option before you settle on one. It is also wise to consult with a legal professional to advise you along way.
If you need guidance selecting the right type of business entity to form, or in any other matter related to managing your business, the attorneys at the Scolieri-Beam Law Group, P.C. can help. Located in western Pennsylvania, our attorneys are experienced in Pennsylvania business law and can take care of the details for you, including the formation of a legal business entity if needed. Contact us today at (412)765-0546 or info@scolierilaw.com.