LLC stands for Limited Liability Company and is a fairly recent entity structure. Its creation and operation are governed by state law. The owner of an LLC is referred to as a member and the manager of the LLC is referred to as a manager. The LLC is a hybrid business entity that combines the best qualities of a limited partnership and a corporation. The LLC provides the greatest amount of flexibility in structure and organization.
An LLC requires fewer formalities than a corporation to create and maintain, but it provides the owners with the same level of protection as a corporation.
An LLC can be taxed as a partnership, an S-Corporation, a C-Corporation, or even a sole proprietorship. Most multi-member LLC’s choose to be taxed as a partnership. Virtually all single- member LLC’s are taxed as a sole proprietorship.
Members of an LLC have limited liability without strict formalities. There is no requirement that any one member have unlimited liability, as is the case with a general partner in a partnership.
An LLC offers flexibility in the management of the business. The LLC can be managed by members or managers without the necessity of electing a board of directors and appointing officers, as is required in a corporation. A member can still be a manager without destroying the limited liability they receive under the LLC, unlike in a partnership where a limited partner cannot engage in the day to day business management without being subject to liability.
For small business owners the entity of choice should be an LLC both for its protection and its flexibility.
Contributed by MH Arrowhead, Phoenix and Scottsdale Estate Planning Attorney and Partner, David T. Eastman.
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You have a number of options when it comes to estate planning, so why pick Morris Hall? First off, estate planning and asset protection are a very complicated endeavor and you should only trust someone who focuses exclusively on those matters. Also, MH is a proud member of The American Academy of Estate Planning Attorneys (AAEPA) which provides us additional support, advanced training, tools and information that is not available to others – which means that we can better protect your assets and your loved ones. We are one of only two firms in Arizona that belong to the AAEPA and are the only firm in that has been granted membership. If you have assets and loved ones that you want to protect, you are in good hands with MH. Contact us today at 888.222.1328 to schedule an appointment!
This blog should be used for informational purposes only. It does not create an attorney-client relationship with any reader and should not be construed as legal advice. If you need legal advice, please contact an attorney in your community who can assess the specifics of your situation.
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