What is an LLC and what are its characteristics?
A Limited Liability Corporation (LLC) is a type of business entity which is used to structure a business in a way that gives the owners protection from certain types of liability. It is a kind of hybrid structure which combines the advantages of both a corporation and a partnership. In Washington, an LLC is formed under the Washington Limited Liability Company Act and can be formed by filing the Articles of Organization with the Secretary of State. The main characteristics of an LLC are that its owners’ personal assets are separated from the business, meaning that if the business is sued or goes into debt then the owners’ personal assets cannot be taken. This is in contrast to an unincorporated business structure where the owners may be personally liable. LLC’s also allow the owners to avoid double taxation, meaning that the profits of the business are not taxed twice. Instead, the profits are only taxed once, when distributed to the owners as dividends. The owners of an LLC are also able to contract with all parties hosting the LLC as well as outside parties to the LLC and benefit from flexibility in management structure and operations. Additionally, LLC’s have fewer record keeping and reporting requirements than a corporation, meaning that they are easier to set up and maintain. This does mean that LLC’s are subject to fewer regulations than a corporation. This be a disadvantage for some owners, as somebody who needs to be more strictly regulated may be better served with one of the other business structures.
Related FAQs
What is the doctrine of equitable estoppel in contract law?What are some of the issues related to franchising?
What is the scope of international business transactions?
What are the types of items that can be secured by a security interest?
What is the concept of agency in business transactions?
What are the implications of international securities transactions?
What is copyright law and what are the implications of its violation?
What is a joint venture and what are its advantages?
What are the differences between domestic and international business transactions?
What is a shareholders' agreement?
Related Blog Posts
Understanding Basic Business Transaction Law: A Beginner's Guide - July 31, 2023Business Transaction Law: The Benefits of Including It In Your Company - August 7, 2023
Important Considerations When Drafting Business Transaction Law Contracts - August 14, 2023
Critical Elements of Business Transaction Law and What You Need to Know - August 21, 2023
Unpacking the Complexities of Business Transaction Law - August 28, 2023