A Limited Liability Company (LLC) is a business structure that is popular because, just like a corporation, owners have limited personal liability from the claims of the creditors of the LLC. An LLC has the option to be taxed like a Corporation, Partnership, or even a Sole Proprietorship. LLCs provide management flexibility and the benefit of pass-through taxation.
LLC owners are called "members". Since most states do not restrict ownership, members may include individuals, corporations, other LLCs and foreign entities. There is no maximum number of members. Most states also permit "single member" LLCs.
A few types of businesses generally cannot be LLCs, such as banks and insurance companies.
LLCs are not taxed as a separate classification for federal tax purposes. LLCs must file a tax return as a corporation, partnership or sole proprietorship. This flexibility makes LLCs very popular.
An LLC with at least 2 members can choose to be classified, for tax purposes, as a corporation or a partnership.
An LLC with a single member can choose to be classified as either an association taxable as a corporation or Sole Proprietor.
LLC formation requires filing the appropriate "Articles of Organization" with the Secretary of State (SOS).
LLC Articles of Organization requirements vary from state to state.
The limited liability company name must be distinguishable from the name of any other LLC, corporation, limited partnership, or company incorporated, organized or authorized to transact business, in that State.
The specific state fees must be paid to the state before the LLC filing will be accepted by that state.
Depending upon the state, and the type of LLC, there are unique procedures along with accompanying cover letters, and specific documentation to be submitted.