A US Limited Liability Company LLC
LLC is a hybrid business entity
which allows a person or persons to operate their business without
putting at risk their personal assets through limiting their liability,
without the complexity of the commonly used corporation. The corporation
is a company limited by shares, while an LLC does not issue shares
and its owners are referred to as members.
In 1874 the state of Pennsylvania enacted a law which authorized
the formation of the limited partnership association and is considered
to be the forerunner to the Limited Liability Company (LLC), and
bears a striking resemblance to it in law. The Limited Liability
Company Law was first enacted in Wyoming in 1977 and now all 50
states of the US have similar legislation.
The US Internal Revenue Service (IRS) was unsure at that time
whether to treat an LLC like a partnership or a corporation (company
limited by shares) for tax purposes. This uncertainty made the
business community nervous and the business form was not widely
used. In 1988 the IRS finally ruled that a Limited Liability Company
(LLC) formed under the Wyoming Statute was eligible for pass-through
tax status, in other words, treated like a partnership under the
Tax Code. The LLC became popular as a business form which was taxed
like a partnership, while allowing personal liability protection
similar to a corporation (company limited by shares). After the
Wyoming Act of 1977 and the IRS ruling in 1988, the LLC became
universally accepted and every state within the union now have
legislation enabling this form of business organization.
While each state provides for the formation of a Limited Liability
Company, there are differences in minor aspects of the law from
state to state; however the fundamental concept is the same.
- The LLC is formed by filing Articles of Organization with the
state secretary of State.
- An LLC does not have shares. The owners are therefore not shareholders
but members.
- The LLC can be formed with one member.
- Members are not liable for the debts of the entity.
- There is no tax liability on the LLC unless the members clearly
choose to be taxed like a corporation (company limited by shares).
- Non-resident aliens may be members of an LLC which has it referred
to as an "offshore LLC".
LIMITED LIABILITY COMPANY (LLC)
The Limited Liability Company (LLC) is a hybrid
with similarities and differences with the other business forms: The
main advantage is that Non-residents can be a member of the LLC.
("Offshore
LLC's")
Find out more at ....
Offshore Companies House (OCH Ltd.) |
