{"id":1761,"date":"2010-11-08T12:06:53","date_gmt":"2010-11-08T19:06:53","guid":{"rendered":"http:\/\/www.financenewmexico.org\/articles\/?p=1761"},"modified":"2013-07-02T12:14:31","modified_gmt":"2013-07-02T18:14:31","slug":"llc-format-appeals-to-many-new-businesses","status":"publish","type":"post","link":"https:\/\/financenewmexico.org\/sandbox\/articles\/starting-or-growing-a-business\/llc-format-appeals-to-many-new-businesses\/","title":{"rendered":"LLC Format Appeals to Many New Businesses"},"content":{"rendered":"
\"Candice

Candice Lee of Sommer, Udall, Hardwick & Hyatt, P.A.<\/p><\/div>\n

Many businesses new to the game choose to organize as a limited liability company, or LLC \u2014 a hybrid of a partnership and corporation that attempts to reap the benefits of both.\u00a0The owners in an LLC are called members, and each member holds a membership interest \u2014 similar to stock or shares \u2014 in the company. These membership interests are sometimes broken down into units.<\/p>\n

As with a corporation, an LLC can have classes of membership interests, each with varying rights and preferences.\u00a0Most important to members of an LLC: They usually are not personally liable for the LLC\u2019s obligations.<\/p>\n

<\/p>\n

Choice and flexibility<\/strong><\/p>\n

An LLC can operate in any commercial area and is often used as a holding company for differing sub-entities.<\/p>\n

Unlike other types of companies, a limited liability company can choose how it would like to be taxed: as a partnership, S corporation or C corporation. Most LLCs choose to be partnerships (if there is more than one member) or S corporations so the LLC\u2019s profits and losses can flow through to the members.\u00a0Few LLCs choose to be taxed as a C corporation because C corporations are subject to double taxation \u2014 shareholders are taxed on dividends, and the corporation\u2019s profits also are taxed before dividends are distributed.<\/p>\n

Most states do not require LLCs to submit ongoing regulatory filings beyond the initial articles of organization or certificate of organization.\u00a0This money-saving feature of an LLC can make it an attractive entity for a new business.\u00a0But if a business owner needs to raise venture capital, she probably will need to convert the LLC into a corporation at some point.\u00a0Most investors prefer dealing with a corporation because a corporation has a more formal structure with more oversight.<\/p>\n

Managing an LLC<\/strong><\/p>\n

An LLC can be managed by a manager or by the members, who are then referred to as \u201cmanaging members\u201d or \u201cmember-managers.\u201d\u00a0A manager doesn\u2019t have to be a member of the LLC.<\/p>\n

As with partnerships, all members of an LLC should sign on to a comprehensive operating agreement \u2014 analogous to a partnership agreement \u2014 that outlines the members\u2019 management responsibilities, contribution amounts, allocation of expenses, distributions, management authority and limitations, dissociation, buyout rights, dispute resolution, admission of new members and dissolution procedures. Relying on oral agreements among members or with outside parties is one of the most common mistakes of unseasoned business owners and can result in confusion, misunderstandings and litigation.<\/p>\n

Regardless of what form a business chooses to take, all of its owners should protect their individual and mutual interests by maintaining comprehensive, organized, written records and documentation.\u00a0They should also consult attorneys and accountants for advice on the risks and rewards of different LLC formats.<\/p>\n

Article 162<\/p>\n

Download\u00a0162_LLC Format Appeals to Many New Businesses<\/a> PDF<\/p>\n","protected":false},"excerpt":{"rendered":"

Many businesses new to the game choose to organize as a limited liability company, or LLC \u2014 a hybrid of a partnership and corporation that attempts to reap the benefits of both. Continue reading →<\/span><\/a><\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[9,3],"tags":[],"_links":{"self":[{"href":"https:\/\/financenewmexico.org\/sandbox\/wp-json\/wp\/v2\/posts\/1761"}],"collection":[{"href":"https:\/\/financenewmexico.org\/sandbox\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/financenewmexico.org\/sandbox\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/financenewmexico.org\/sandbox\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/financenewmexico.org\/sandbox\/wp-json\/wp\/v2\/comments?post=1761"}],"version-history":[{"count":10,"href":"https:\/\/financenewmexico.org\/sandbox\/wp-json\/wp\/v2\/posts\/1761\/revisions"}],"predecessor-version":[{"id":1773,"href":"https:\/\/financenewmexico.org\/sandbox\/wp-json\/wp\/v2\/posts\/1761\/revisions\/1773"}],"wp:attachment":[{"href":"https:\/\/financenewmexico.org\/sandbox\/wp-json\/wp\/v2\/media?parent=1761"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/financenewmexico.org\/sandbox\/wp-json\/wp\/v2\/categories?post=1761"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/financenewmexico.org\/sandbox\/wp-json\/wp\/v2\/tags?post=1761"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}