What is a limited liability company? A limited liability company, "LLC," is a business structure that fits somewhere between the partnership or sole proprietorship and the corporation. Like owners of partnerships or sole proprietorships, LLC owners report business profits or losses on their personal income tax returns; and, the LLC itself is not a separate taxable entity.
Like a corporation, however, all LLC owners are protected from personal liability for business debts and claims -- a feature known as "limited liability." This means that if the business owes money or faces a lawsuit, only the assets of the business itself are at risk. Creditors normally can not reach the personal assets of the LLC owners, such as a house or car. (Both LLC owners and corporate shareholders can lose this protection by acting illegally, unethically or irresponsibly.)
For these reasons, the LLC combines the best features of both the partnership and corporate business structures.
Who should form an LLC? You should consider forming an LLC if you are concerned about personal exposure to lawsuits arising from the type of business you have. For example, if you decide to open a store-front business that deals directly with the public, your commercial liability insurance may not fully protect your personal assets from potential slip-and-fall lawsuits or claims by your suppliers for unpaid bills. Whether your business sells products or provides personal services, running your business as an LLC instantly gives you personal protection against the potential claims against your business.
If you are trying to decide whether the LLC is the right structure for your business (whether you are a new business or whether you want to convert from your current structure), contact our law offices for expert legal advice.
Call (215) 321-4033 with questions and to learn more.
Estate Planning Law Office of Yvette E. Taylor-Hachoose
1234 River RoadWashington Crossing, PA 18977
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