What do llc stand for

Unlike shareholders in a corporation, LLCs are not taxed as a separate business entity. Instead, all profits and losses are "passed through" the business to each member of the LLC. LLC members report profits and losses on their personal federal tax returns, just like the owners of a partnership would. Most states did not adopt the model and the act was amended in , and , according to a recent summary [PDF].

However, it is a framework for states to follow. The summary points out that in most every state, new LLC formations exceed that of corporate formations. Most states have their own statutes, so the rules may vary depending upon where you live and form an LLC. Members of a limited liability company can be one or more individuals, corporations, foreign entities and even other LLCs. However, generally banks and insurance companies cannot be LLCs.

Certain states may have other restrictions as well. A limited liability company is not a separate entity for tax purposes. The big benefit of forming an LLC is limited personal liability. This is similar to the liability protections afforded to shareholders of a corporation. Keep in mind that limited liability means "limited" liability - members are not necessarily shielded from wrongful acts, including those of their employees.

Public policy dictates that we want to encourage business formation and protect them to a certain extent. Yet, it also requires that a business whether an LLC or not, may not evade all responsibility.

So if you celebrate your new LLC with some tasty craft beer, toast to your new venture and remember the designated driver. Contents 3 min read. Lisa Johnson is a Massachusetts attorney, freelance writer, and food blogger. Born in Boston, she currently resides in Q… Read more.

Another feature of a LLC is its flexibility to convert into a corporation business structure. And vice versa, a corporation can convert into a LLC. One of the benefits of a LLC is its management flexibility as it can be set up and managed as a partnership, where their members managed the company, or as a corporation.

Being managed as a corporation, a LLC can elect a president, board of directors and observe the formalities of a corporation with a board and member meetings.

However, they can decide to skip the formalities altogether, which are required by regular corporations. A LLC can elect to be taxed like a partnership or a corporation. Corporate tax rates are lower than individual tax rates, which means more money for the corporation. However, when profits of a corporation are shared with their shareholders, it is taxed again when it is reported on their individual tax forms.

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