ANSWERS: 1
  • A LLC, or limited liability company, is a type of business structure designed to limit the personal liability or risk to the owners of the company. The owners of the company are referred to as members, and can be persons or other companies.

    Significance

    A LLC allows companies or persons to partner together to create a company without risking the debt or actions of the company affecting their personal lives. In other words, they are not personally liable for the debt or actions of the company.

    Function

    A LLC is a type of company designated by state statue, for tax and structuring purposes.

    Features

    A LLC allows its members to operate in a similar fashion as a corporation liability-wise and act as a partnership with flexibility and tax-pass through benefits.

    Considerations

    The size of a LLC is irrelevant. It can be one person to a large conglomerate of companies. However, large corporations tend to avoid operating in this manner.

    Misconceptions

    While a LLC does limit the personal risk of the company's debt, if a borrower procures the business debt with a personal name or using personal property, he or she is still personally liable for the debt.

    Source:

    Irs.gov: Limited Liability Company

    Entrepreneur.com: Term definition: Limited Liability Company

Copyright 2023, Wired Ivy, LLC

Answerbag | Terms of Service | Privacy Policy