Limited Liability Company (LLC) and its Types
A limited liability company (LLC) limits owners’ personal liability if the business cannot pay its debts. LLCs limit liability like a corporation but have partnership’s pass-through taxation. Earlier, company owners were liable during dissolution. Now liability is limited.
Private and Public Limited Companies
- *"Ltd" and "Limited" mean the same – the company is limited by shares.
- *Private limited companies cannot offer public shares. Public limited companies can.
Types of LLC
Two common LLC types are sole proprietorships and partnerships. Professional LLCs are owned by certain professionals. Series LLCs have one main LLC and other LLCs within it, often for real estate.
Ownership Structure and Taxation
Owners put company profits/losses on personal tax returns. Multi-member LLCs have two or more co-owners with profit sharing based on investment. Member-managed LLCs are operated by the members. Manager-managed LLCs have appointed managers.
Taxation and Liability
No matter the type, LLCs default to pass-through taxation. They can elect C-corp or S-corp status with the IRS. Corporations also limit owners’ liability. Limited liability partnerships give corporate limited liability and partnership flexibility.