LLC Formation combines core elements from Corporations and Partnerships. The basic structure of LLC formation is:
- The owners have limited liability for the entity’s debts and obligations, similar to a corporation; and
- The income or losses from the business are passed through to the owners, similar to a Partnership.
Distinguishing Elements of LLC Formation
An LLC sets itself apart from a Partnership in the following ways:
- A formal document, often called Articles of Organization, are filed in the state where the LLC is Incorporated; and
- The owners of an LLC are not personally liable for the debts and obligations of the entity.
It is different from a corporation in the following ways:
- The entity is not taxed; instead, profits and losses flow through to the owners;
- It has less administrative requirements than a corporation as it lacks shareholders; and
- It does not have an unlimited life in most jurisdictions and may need to be dissolved upon the death of an owner.
Navigating the complexities of LLC Formation can be time consuming and daunting. Contact us today for help.