A Limited Liability Company is a relatively new form of business organization first developed in Wyoming and spreading in popularity to each of the other states in the Union. It is formed under the authority of state law by filing Articles of Organization with the Secretary of State. This form of business organization has gained considerable popularity in recent years and is considered by some to be easier to manage than a corporation. It has members rather than shareholders and is managed by managers (hired by the LLC) or member-managers (designated by the members) rather than by officers and directors. The resulting company is a legal entity within itself, separate from its members and managers. The name of the company must include “Limited Liability Company”, “Limited Company”, “L.L.C.”, “LLC”, “L.C.” or “LC”.
- Liability: Unless otherwise agreed, members and managers are not liable for any debt, obligation or liability of the LLC. Members (in a member-managed LLC) and managers generally are liable for breaches of fiduciary duties. Members are liable for their agreed upon contributions to the LLC.
- Federal Taxes: An LLC is a pass through entity, similar to an S Corporation.
- Formal responsibilities: The LLC, to maintain its viability under the law, must keep its Articles of Organization, operating agreement (optional), and minutes. The company must annually file a List of Members or Managers with the Secretary of State and maintain a registered agent and registered office within the state.
- Regulation: Limited Liability Companies are regulated under Nevada Revised Statutes (NRS) Chapter 86.
- Benefits: Limited Liability, flexibility
- Drawbacks: Not as well-known and understood as corporations. Members must obtain consent from other members before transferring membership interests unless otherwise agreed upon.
The form (corporation, limited liability company, or limited partnership to name the commonly used forms) you select for your business will have legal, management and taxation ramifications and would be best considered with a professional.
Limited-Liability Company (NRS Chapter 86)