Limited Liability Companies

<p> In the scope of things Limited Liability Companies, known commonly as LLCs, are relatively new.  One of the greatest assets of LLCs is the flow through tax treatment.  This can save you massive amounts of money by avoiding double taxation.  <p/>

<p> There are four characteristics of a corporation where if a limited liability company has those they will be taxed as and considered a corporation.  They are as follows: <p/>

·         Limited liability as to the entities property <br>

·         Free transferability of interest <br>

·         Continuity of life <br>

·         Centralized management

<p> In order to create an LLC you must file with the Secretary of State.  Once you file you will have an operating agreement that is very specific to your state.  It lays out exactly how your company is going to operate and is where the four characteristics mentioned above are defined. <p/>

<p> One of the huge advantages of the LLC is what is called a charging order.  If your property is in an LLC and you are sued then the charging orders prevents you from loosing this property.  The only thing a lawyer can go after is the profit of that LLC.  This is a huge tool when protecting your assets. <p/>

<p> Unlike a partnership there must be a majority vote in order to bind when dealing with an LLC.  Members of an LLC don’t have to be people.  You can be the member of an LLC as a corporation, a trust, or as a foreign national.  This of course is not true of S Corporations. <p/>

<p> The main problem with an LLC is if you overstep your boundaries you will be kicked over to the tax laws and liabilities of a C Corp.  This makes it very important to make sure that when drafting an LLC everything is done properly.  For more information about setting up an LLC go to pfbs.com. <p/>