The limited liability company is popular today because it brings the best features of all business forms into one entity. Generally, 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.
When describing LLC’s, it is customary to compare them with corporations and partnerships. Partnerships have been used for years because of the ease of management and single personal tax. The problem with partnerships is that the individual partners can be held personally liable for acts of the partnership. A limited liability company 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 can also be compared to a corporation. At one time, a corporation was a favorable entity because it protected individuals from personal liability. The problem with a corporation, however, is that the corporation is subject to a double tax. This means that the corporation’s profits are taxed and then once the profits are distributed to the shareholders, the shareholders are personally taxed on those profits. In addition, a corporation must have a board of directions and hold annual meetings.
An LLC does not have a board of directors, but instead is member or manager run. An LLC is beneficial for business owners over a corporation because these owners do not have to hold the annual meetings and keep minutes of those meetings.
The attorneys at Scolieri Law Group, P.C. are available to meet with you to discuss the various types of business entities available in Pennsylvania and help you decide if an LLC is the right entity for your business. Contact us today at (412)765-0546 or firstname.lastname@example.org.