Limited Liability Companies
A Limited Liability Company, or LLC, is recognized as a separate legal entity from its Members. An LLC is a cross between a corporation and a partnership. An LLC has the flexibility of a partnership and the protection of a corporation. There are fewer formalities and a LLC can have only one member to manage the company business. To create an LLC Articles of Organization along with the statutory fee is filed with the Secretary of State. Unlike a corporation an LLC must specify its time duration. To complete the formation of this business entity the member or members must execute an Operating Agreement.

The Operating Agreement specifies the LLC’s management and control of the day to day operations, voting rights, and transferability of the units of ownership in the LLC. To become a new member of the LLC the consent of majority of the members is necessary. As such a transfer of units of an existing member does not automatically include membership into the LLC.

There are tax benefits to a LLC. Usually the LLC is liable for the company’s debts, shielding the members from individual liability, not unlike the protection of a corporation. However, the “flow through” theory applies wherein the losses flow through to the individual members via a K-1 partnership form, which can be deducted on the member’s individual taxes.

The “Alter Ego” doctrine is also applicable to LLCs. As such the members could be liable for the LLC’s debts, if formalities are not adhered to.

If you are ready to go forward, please navigate to our Order Form or contact us at the information below:

California Incorporation Services Inc.
1632 19th Street, Santa Monica, CA 90404
info@calincorporationservices.com
(310) 453-6911
Toll Free: (800) 335-0095
Fax: (888) 483-2030, (310) 828-7373