The Limited liability company reference article from the English Wikipedia on 24-Jul-2004 (provided by Fixed Reference: snapshots of Wikipedia from wikipedia.org)

Limited liability company

A Limited liability company (or 'L.L.C.') is a type of legal entity which has only relatively recently been intoduced to (or rather made possible to establish in) the United States and many other (mainly English speaking) countries. An LLC is similar to a corporation and a limited partnership.

The concept of an LLC was apparently modelled after the German GmbH (=Gemeinschaft mit beschränkter Haftung; LLC is a broad translation of the term). GmbHs have existed in German speaking countries for some time. The concept was adopted by many English speaking countries because LLC formations have some advantages (but also disadvantages) over incorporations. To illustrate the difference between LLCs and incorporated companies and/or limited partnerships, it is sometimes said that an LLC was "kind of a 'light' version of an Inc. or Ltd." This is however a generalisation and may be misleading or wrong in some cases.

Basically an LLC allows for the flexibility of a partnership structure within the framework of limited liability, such as that granted to corporations. Another advantage of an LLC over a limited partnership is that the formalities required for creating and registering an LLC are much simpler that the requirements most states place on forming Corporations; often they are no more complex than creating a corporate structure.

Table of contents

1 LLC vs. Inc. & Ltd. 1.1 Advantages of an LLC 1.2 Disadvantages of an LLC 2 See also

LLC vs. Inc. & Ltd.

Advantages of an LLC

• Simpler to set up
  
• No requirement of an Annual General Meeting for shareholders
  
• No lawyer required
  
• No double taxation
  
• Limited liability

(Sometimes however, LLCs can still be held liable, usually in the cases of personal injury, fraud or negligence by the owner.)

• Profits taxed personally
  
• Can be set up with just one natural person involved
  
  

Disadvantages of an LLC

• It may be more difficult to raise capital for an LLC, as investors may be wary of submitting funds to an entity whose liability is limited.
  
• The possible lack of any operating agreement requirement can cause problems.
  

See also

• LLC History and http://www.progress.org/2003/corpw32.htm
• Nolo site on LLCs

This is the "Limited liability company" reference article from the English Wikipedia. All text is available under the terms of the GNU Free Documentation License. See also our Disclaimer.