Overview of LLC Structure and Formation
A limited liability company (LLC) is a private business structure that offers liability protection to its owners. An LLC has rights, responsibilities, debts, and assets separate from its owners. To form an LLC, owners file articles of organization with the state’s Secretary of State.
Distinction Between Private and Public LLCs
There are differences between private and public LLCs. A private LLC has a limited number of owners, while a public LLC sells stocks publicly. Private LLC ownership details may not be public record, offering more privacy. However, private LLCs have smaller resources than public LLCs. Public LLCs must meet regulatory requirements like disclosure and compliance with securities laws.
Taxation and Ownership Details of LLCs
LLCs receive pass-through taxation – profits pass directly to owners. If an LLC wants to sell shares publicly, it must reorganize. LLC documents required for formation include articles of organization. To find if a business is an LLC, search state databases of registered businesses. LLC ownership details depend on state law. Some states keep identities private, while others list owners publicly. Banks may more readily loan to registered, regulated private LLCs. However, setting up a private LLC is more complex than a public one.