Limited Liability Company Essay

860 Words 4 Pages
A limited liability company is a hybrid business organization that takes the limited liability aspects of a corporation and merges them with the tax benefits and operational flexibility associated with a partnership. The Commonwealth of Virginia defines a Limited Liability
Company or LLC as an entity that is an unincorporated association having two or more members that is organized and existing under the Virginia Limited Liability Act. § 13.1-1002. In the Commonwealth, the first step in forming a limited liability company is choosing a name. There are two distinct requirements for a business name, the name must be distinguishable from other business names registered with the Virginia State Corporation Commission and the name must contain the words “Limited
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An LLC is considered a separate legal entity from the owners, protecting them from being personally liable for the business’ debts or liabilities. There are very few, if any, restrictions on ownership allowing for any number of owners and may include other corporations or a combination of corporations and individuals. An ability to raise capital, members of a limited liability company may choose to sell stocks interest in their company to raise capital. There is a more flexibility in management, all members of a limited liability company are free to participate in the management of the company without fear of losing their limited liability status. Lastly, there are advantages as to how the limited liability company is taxed. The Internal Revenue Service, for tax purposes, LLCs are treated much like a partnership or sole proprietorship and “pass through” the profits and losses to the owners who report them on their personal income tax returns. This benefit allows the business to avoid double taxation, where the business and the owners are taxed based on the same

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