Companies law
Basic forms:
Sole proprietorship
Partnership (General · Limited · LLP)
Corporation
Cooperative
United States:
Business trust · LLC · LLLP Series LLC Delaware corporation Nevada corporation
United Kingdom / Commonwealth / Ireland:
Limited company (By shares · By guarantee) (Public · Proprietary) Community interest company
Civil law countries:
AB · AG · ANS · A/S · AS
K.K. · N.V. · OY · S.A. · GmbH
European Company Statute
Doctrines
Corporate governance
Limited liability · Ultra vires
Business judgment rule
Internal affairs doctrine
De facto corporation and corporation by estoppel
Piercing the corporate veil
Rochdale Principles
Related areas of law
Contract · Civil procedure

This article is about a U.S.-specific corporate form; for a general discussion of entities with limited liability, see corporation.

A limited liability company (denoted by L.L.C. or LLC) in the law of many of the United States is a legal form of business company offering limited liability to its owners. It is similar to a corporation, and is often a more flexible form of ownership, especially suitable for smaller companies with a limited number of owners. Unlike a regular corporation, a limited liability company with one member may be treated as a disregarded entity, so the member is often singled-out as a person performing the actions of the LLC. A limited liability company with multiple members may choose, generally at the time that the new entity applies for a US federal taxpayer ID number, to be treated for U.S. federal taxation purposes as a partnership, as a C corporation, or as an S corporation. An LLC can elect to be either "member managed" or "manager managed." Image File history File links Scale_of_justice. ... Corporations law (also called companies law and corporate law) is the field of law concerning the creation and regulation of corporations and other business organizations. ... A sole proprietorship, or simply proprietorship, is a type of business entity which legally has no separate existence from its owner. ... A partnership is a type of business entity in which partners share with each other the profits or losses of the business undertaking in which all have invested. ... This article needs to be wikified. ... A limited partnership is a form of partnership similar to a general partnership, except that in addition to one or more general partners (GPs), there are one or more limited partners (LPs). ... A limited liability partnership (LLP) has elements of partnerships and corporations. ... For other uses, see Corporation (disambiguation). ... For other uses, see Coop. ... A Massachusetts business trust or MBT is a legal trust set up for the purposes of business in the state of Massachusetts. ... The limited liability limited partnership (LLLP) is a relatively new modification of the limited partnership, a form of business entity recognized under US commercial law. ... A Series LLC is a special form of a Limited liability company that provides extra protection for personal assets comprised of multiple business entities. ... A Delaware corporation is a corporation chartered in the U.S. state of Delaware. ... It has been suggested that this article or section be merged into Nevada. ... It has been suggested that this article or section be merged into Limited liability company. ... A limited company by shares (limited or Ltd. ... In British or Irish company law, a Limited Company is a person on its own right. ... The initials PLC after a UK or Irish company name indicate that it is a public limited company, a type of limited company whose shares may be offered for sale to the public. ... A Proprietary limited company or abbreviated as under Australian law is a business structure that has at least one shareholder with a limited number of shares. ... A community interest company (CIC) is a new type of company introduced by the United Kingdom government in 2005. ... For other uses of civil law, see civil law. ... Aktiebolag is the Swedish term for a corporation, i. ... Aktiengesellschaft (IPA: ; abbreviated AG) is a German term that refers to a corporation that is limited by shares, i. ... An ansvarlig selskap is a Norwegian personal responsibility company model, mainly used in small-to-medium businesses, which translates directly into Responsible Company. This reflects that the participants - or owners - are personally responsible for any outstanding debts the company would aquire. ... An Aktieselskab (abbreviated A/S) is the Danish name for a stock-based corporation. ... An aksjeselskap is the Norwegian term for a stock-based corporation. ... Business corporation ) is a type of corporation ) defined under Japanese law. ... The term Naamloze Vennootschap (usually abbreviated NV) is the Dutch terminology for a public limited liability company. ... Osakeyhtiö, directly translated as share corporation, is the Finnish equivalent of Limited company (Ltd or LLC) or Gesellschaft mit beschränkter Haftung (GmbH). ... S.A. is the abbreviation of Société Anonyme in French, Spółka Akcyjna in Polish, Sociedad Anónima in Spanish, Sociedade Anónima in Portuguese, or Naamloze Venootschap (N.V.) in Dutch, generally designating corporations in various countries. ... Gesellschaft mit beschränkter Haftung (GmbH or GesmbH) is a type of legal entity created in Germany in 1892. ... The Council Regulation on the Statute for a European Company of the European Union (adopted October 8, 2001; OJ L 294, 10 November 2001, pp. ... Corporate governance is the set of processes, customs, policies, laws and institutions affecting the way in which a corporation is directed, administered or controlled. ... Limited liability (LL) is liability that is limited to a partner or investors investment. ... Ultra vires is a Latin phrase that literally means beyond the power. ... The business judgment rule is a case law-derived concept in Corporations law whereby a court will refuse to review the actions of a corporations board of directors in managing the corporation unless there is some allegation of conduct that (1) violates (a) the directors duty of care, (b... The internal affairs doctrine is a choice of law rule in corporations law. ... De facto corporation and corporation by estoppel are both terms that are used by courts to describe circumstances in which is a business organization that has failed to become a de jure corporation (a corporation by law) will nonetheless be treated as a corporation, thereby shielding shareholders from liability. ... The corporate law concept piercing (Lifting) the corporate veil describes a legal decision where an officer, director, or shareholder of a corporation is held liable for the debts of the corporation despite the general principle that those persons are immune from suits in contract or tort that otherwise would only... The Rochdale Principles are a set of ideals for the operation of cooperatives. ... A contract is a legally binding exchange of promises or agreement between parties that the law will enforce. ... Civil procedure is the body of law that sets out the process that courts will follow when hearing cases of a civil nature (a civil action, as opposed to a criminal action). ... For other uses, see Corporation (disambiguation). ... Look up company in Wiktionary, the free dictionary. ... Limited liability (LL) is liability that is limited to a partner or investors investment. ... For other uses, see Corporation (disambiguation). ... This article does not cite any references or sources. ...        Corporate tax in the United States is a tax on the taxable income of a C corporation or an entity taxed as a C corporation. ... A partnership is a type of business entity in which partners share with each other the profits or losses of the business undertaking in which all have invested. ... A C corporation (or C corp. ... An S corporation or S-corp, for US federal tax purposes, is a corporation that makes a valid election to be taxed under Subchapter S of Chapter 1 of the Internal Revenue Code. ...

Management structures

Choosing to operate by member management creates a flat member or partnership structure. Choosing manager management creates a two-tiered management structure potentially convertible into a corporation, with the attendant tax consequences. LLCs use IRS Form 1065 (if taxed as a partnership) and Schedule SE (Self-Employment Tax). It is often incorrectly called a "limited liability corporation" (instead of company). LLCs are organized with a document called the "articles of organization", or "the rules of organization" specified publicly by the state; additionally, it is common to have an "operating agreement" privately specified by the members. The operating agreement is a contract among the members of an LLC governing the membership, management, operation and distribution of income of the company. To meet Wikipedias quality standards, this article or section may require cleanup. ...

Managing members are the individuals who are responsible for the maintenance, administration and management of the affairs of an LLC. In most states, the managers serve a particular term and report to and serve at the discretion of the members. Specific duties of the managers may be detailed in the articles of organization or the operating agreement of the LLC. In some states, the members of an LLC may also serve as the managers.

Members are the owner(s) of an LLC. Unless the articles of organization or operating agreement provide otherwise, management of an LLC is vested in the members in proportion to their ownership interest in the company.

Operating as an LLC form of partnership does not mean that appropriate US federal partnership tax forms are not necessary, or not complex. As a partnership, the entity's income and deductions attributed to each member are reported on that owner's tax return.

LLCs can lose their tax advantage without the partnership structure. The possible label "disregarded entity" for income tax purposes singles out the one-member owner of an LLC as actually earning income and deductions directly. It is the owner, then, who reports as a business proprietor, rather than as an LLC operating an active trade or business. An LLC passively investing in real estate and owned by a single member would have its income and deductions reported directly on the owner's individual tax return on a Schedule E tax form. And an LLC owned by a corporation--in other words, an LLC with a single corporate member--would be treated as an incorporated branch and have its income and deductions reported on the corporate tax return, creating double taxation.

Advantages

• No requirement of an annual general meeting for shareholders.
• No loss of power to a board of directors.
• Much less administrative paperwork and recordkeeping than a corporation.
• Pass-through taxation (i.e., no double taxation), unless the LLC elects to be taxed as a corporation.
• Limited liability, meaning that the owners of the LLC, called "members," are protected from liability for acts and debts of the LLC.
• Using default tax classification, profits are taxed personally at the member level, not at the LLC level.
• Check-the-box taxation. An LLC can elect to be taxed as a sole proprietor, partnership, S corporation or C corporation, providing much flexibility.
• LLCs in some states can be set up with just one natural person involved.
• Membership interests of LLCs can be assigned, and the economic benefits of those interests can be separated and assigned, providing the assignee with the economic benefits of distributions of profits/losses (like a partnership), without transferring the title to the membership interest (i.e., see Virginia and Delaware LLC Acts).
• LLCs in most states are treated as entities separate from their members, whereas in other jurisdictions case law has developed deciding LLCs are not considered to have separate juridical standing from their members (See recent D.C. decisions).
• Unless the LLC has chosen to be taxed as a corporation, income of the LLC generally retains its character, for instance as capital gains or as foreign sourced income, in the hands of the members.

Disadvantages

• Many states, including Alabama, California, Kentucky, New Jersey, New York, Pennsylvania, Tennessee, and Texas, levy a franchise tax or capital values tax on LLCs. (Beginning in 2007, Texas has replaced its franchise tax with a "margin tax".) In essence, this franchise or business privilege tax is the "fee" the LLC pays the state for the benefit of limited liability. The franchise tax can be an amount based on revenue, an amount based on profits, or an amount based on the number of owners or the amount of capital employed in the state, or some combination of those factors, or simply a flat fee, as in Delaware. Effective in Texas for 2007 the franchise tax is replaced with the Texas Business Margin Tax. This is paid as: tax payable = revenues minus some expenses with an apportionment factor. In most states, however, the fee is nominal and only a handful charge a tax comparable to the tax imposed on corporations.
• It may be more difficult to raise financial capital for an LLC as investors may be more comfortable investing funds in the better-understood corporate form with a view toward an eventual IPO. One possible solution may be to form a new corporation and merge into it, dissolving the LLC and converting over to a corporation.
• The LLC form of organization is relatively new, and as such, some states do not fully treat LLCs in the same manner as corporations for liability purposes, instead treating them more as a disregarded entity, meaning an individual operating a business as an LLC may in such a case be treated as operating it as a sole proprietorship, or a group operating as an LLC may be treated as a general partnership, which defeats the purpose of establishing an LLC in the first place, to have limited liability (a sole proprietor has unlimited liability for the business; in the case of a partnership, the partners have joint and several liability, meaning any and all of the partners can be held liable for the business' debts no matter how small their investment or percentage of ownership is).^{[citation needed]}
• Although there is no public requirement for an operating agreement, members who operate without one may run into problems.
• Some people, such as new business people, may not be familiar with the governance of LLCs. Unlike corporations, they are not required to have a board of directors or officers.
• The principals of LLCs use many different titles -- e.g., member, manager, managing member, managing director, chief executive officer, president, partner. As such, it can be difficult to determine who actually has the authority to enter into a contract on the LLC's behalf.

Franchise tax is a tax charged by some US states to corporations formed in those states based on the number of shares they issue or, in some cases, the amount of their assets. ... In brief, financial capital is money used by entreprenuers and businesses to buy what they need to make their products (or provide their services). ... “IPO” redirects here. ... A Sole proprietorship is a business which legally has no separate existence from its owner. ... This article needs to be wikified. ...

Variations

• A Professional Limited Liability Company (PLLC or P.L.L.C.) is a limited liability company organized for the purpose of providing professional services. Usually, professions where the state requires a license to provide services, such as a doctor, chiropractor, lawyer, accountant, architect, or engineer, require the formation of a PLLC. Exact requirements of PLLCs vary from state to state.

• A Series LLC is a special form of a Limited liability company that provides extra protection for personal assets comprised of multiple business entities.

Chiropractic treatment uses manipulative therapy to correct subluxation, which has been shown to have some efficacy in treating back and neck pain, headache, and other symptoms of spinal-related conditions. ... For the fish called lawyer, see Burbot. ... Accountant, or Qualified Accountant, or Professional Accountant, is a certified accountancy and financial expert in the jurisdiction of many countries. ... For other uses, see Architect (disambiguation). ... Look up engineer in Wiktionary, the free dictionary. ... A Series LLC is a special form of a Limited liability company that provides extra protection for personal assets comprised of multiple business entities. ...

History by country

Companies with limited liability exist in business law world-wide, however the Limited Liability Company is a specific legal structure defined by the laws of states of the United States and with quite different characteristics. Few other countries have similar structures.

United States

LLCs were first enacted by the state of Wyoming but can now be created under the laws of any U.S. state. They were chiefly inspired by the GmbH, a type of business organization in Germany, and by limitadas, a type of business organization available in many Latin American countries. Official language(s) English Capital Cheyenne Largest city Cheyenne Area  Ranked 10th  - Total 97,818 sq mi (253,348 km²)  - Width 280 miles (450 km)  - Length 360 miles (580 km)  - % water 0. ... Gesellschaft mit beschränkter Haftung (GmbH or GesmbH) is a type of legal entity created in Germany in 1892. ... Latin America consists of the countries of South America and some of North America (including Central America and some the islands of the Caribbean) whose inhabitants mostly speak Romance languages, although Native American languages are also spoken. ...

United Kingdom

There is no corporate structure in the United Kingdom corresponding directly to LLCs. The similar-sounding limited companies are more similar to U.S. corporations. The new form of Limited liability partnership (LLP) (created in 2002) is however similar to LLCs as it is tax neutral: member partners are taxed at the partner level, but the LLP itself pays no tax. They are treated as a body corporate for all other purposes including VAT. It has been suggested that this article or section be merged into Limited liability company. ... A limited liability partnership (LLP) has elements of partnerships and corporations. ... vat can be a type of barrel used for storage. ...

Japan

Japan passed legislation in 2006 creating a new type of business organization, godo kaisha, a close variant of the American LLC. Year 2006 (MMVI) was a common year starting on Sunday of the Gregorian calendar. ... A gōdō kaisha (合同会社), abbreviated GDK, is a type of business organization in Japan modeled after the American limited liability company (LLC). ...

Chile

Chilean legislation contemplates LLC's as Sociedad Comercial de Responsabilidad Limitada (Limited Liability Commercial Association). Companies working under this structure append the abbreviation Ltda. to their name. Therefore, a company which in the United States is called SomeCompany LLC would be called SomeCompany Ltda. in Chile.

Names and abbreviations

Most states require that the company name contain one of the following terms, with some variation by state:

• Limited Liability Company, L.L.C., or LLC
• Limited Company, L.C., or LC
• Ltd. Co.

Limited liability companies may not use the following terms on their own:

• Company or Co. — reserved for corporations in most states
• Limited or Ltd. — reserved for corporations in Texas (except in Nevada, which allows the use of Limited or Ltd.)

See also

• Limited liability
• Types of companies
• Uniform Limited Liability Company Act
• Series LLC
• LLP

Limited liability (LL) is liability that is limited to a partner or investors investment. ... This is a list of types of companies, i. ... The Uniform Limited Liability Company Act (ULLCA), which includes its 2006 revision called the Revised Uniform Limited Liability Company Act, is a uniform act (similar to a model statute), proposed by the National Conference of Commissioners on Uniform State Laws (NCCUSL) for the governance of limited liability companies (often called... A Series LLC is a special form of a Limited liability company that provides extra protection for personal assets comprised of multiple business entities. ... Categories: Wikipedia cleanup | Stub | Types of companies ...

References

External links

• LLC History
• LLC Overview, Nolo.com