LLC At A Glance

An LLC, or a limited liability company, allows the entity of a corporation to be formed while allowing that entity to have limited financial and legal liability for the actions of that corporation.

AN LLC can include any number of shareholders or partners which includes taxation as a corporation, but they are not technically a corporation. Many times, a limited liability corporation is a sole proprietor company with a single owner.

A single owner may form an LLC in order to protect their finances and personal interests from the corporation. For example, if someone were to sue the LLC and win, the individual owners’ finances could not be included in any awards. In most cases, a judgment against an LLC could not include collection for that judgment from the personal or individual property of any of the individuals that make up the LLC.

Although a limited liability corporation helps to protect those who make up the corporation, there are issues where legal and financial liability is not limited to the corporate entity. For example, if individuals in that corporation commit fraud or misrepresent the corporation, individuals and the company could be liable.

For smaller companies, an LLC is a great way to form a corporation while allowing those within the corporation to have limited financial and legal liability. In addition, the formation of an LLC protects the company itself from being legally and financial liable in most cases. For instance, the owner of an LLC that goes bankrupt would not be liable to the creditors of that corporation in most cases.