Limited Liability Companies

1277 Words Feb 1st, 2018 5 Pages
Based on their needs LLC would be a perfect form of business for them. As their company was sole proprietorship ran by their dad, LLC offers some advantages of a corporation, as well as some advantages of a sole proprietorship. “A limited liability company, commonly called an "LLC," is a business structure that combines the pass-through taxation of a partnership or sole proprietorship with the limited liability of a corporation.” (Nolo, 2014, n.a.) The characteristics of LLCs and a partnership company are somewhat similar as they both provide flexibility to the management and also the benefit of pass-through taxation. The Owners of an LLC are called members. As most states do not have any limit on ownership, members can be individuals, companies, other LLCs and foreign individuals. There is no limit on the number of members in LLC. Some LLC also have only one owner, which is called a single member, and it is allowed in most of the states. Most states do not restrict ownership, and so members may include individuals, corporations, other LLCs and foreign entities” (irs.gov, 2014)
There are some important factors that Alex, Bill, Carl, Devon and Xavier should know before they move forward to convert their business into Limited Liability Company.
Ease and cost of formation In order to establish LLC, an…
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