L.L.C. stands for Limited Liability Company and is a phrase that you may often see after the names of companies.
Have you registered an LLC and are now pondering running your new business?
If you like beer, you might be curious to know about a newly founded enterprise called Enjoy Beer L.L.C., calling themselves “a partnership of separate brewers uniting to grow our companies and celebrate beer culture.”
According to a BeerAdvocate article, the Boston-based L.L.C. “will form partnerships with additional top craft brewers who wish to hold their regional autonomy, while achieving shared resources in areas such as marketing, sales, purchasing, logistics, and finance in demand to compete with large-scale corporate competitors.”
You may have moved your focus from beer to wondering what L.L.C. means. Or not. If you haven’t shifted yet, then let’s go. What does L.L.C. stand for? L.L.C. stands for Limited Liability Company and is a term that you may often see after the names of companies.
Other names and abbreviations that display a limited liability company are L.L.C., limited company, L.C., L.C., Ltd. liability company, Ltd. liability co., and limited liability co.
What is an L.L.C.?
A limited liability company is a mixed type of legal structure that provides the limited liability features of a corporation and the tax efficiencies and operational flexibility of a partnership.
The “owners” of an L.L.C. are referred to as “members.” The members can consist of a single individual (one owner), two or more individuals, corporations, or other L.L.C.s.
Unlike shareholders in a corporation, L.L.C.s are not taxed as a separate business entity. Instead, all profits and losses are “passed through” the business to each member of the L.L.C. L.L.C. members declare profits and losses on their tax returns, just like the owners of a partnership would.”
The summary points out that new L.L.C. formations exceed corporate buildings in almost every state. Most states have their statutes, so the rules may vary depending upon where you live and form an L.L.C.
An Internal Revenue Service (I.R.S.) article states that there are few restrictions on who can be a member. A limited liability company can be one or more individuals, corporations, foreign entities, and even other L.L.C.s. However, generally, banks and insurance companies cannot be L.L.C.s. Certain states may have additional restrictions as well.
As mentioned by the Tax authorities reiterates that members are taxed personally. A limited liability company is not a separate entity for tax purposes.
The significant advantage of forming an L.L.C. is limited personal liability. If the L.L.C. incurs an obligation, members’ assets are usually exempt. This is similar to the liability protections afforded to shareholders of a corporation. Keep in mind that limited liability means “limited” liability – members are not necessarily shielded from wrongful acts, including those of their employees.”
Public policy dictates that we want to encourage business formation and protect them to a certain extent. Yet, it also requires that a business, whether an L.L.C. or not, may not evade all responsibility. So if you celebrate your new L.L.C. with some tasty craft beer, toast to your new venture and remember the designated driver.
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