Examples Of A Limited Liability Company

Submitted By coffey14
Words: 521
Pages: 3

John Smith
Ryan Coffey

Business Recommendation

After reviewing the current scenario of the businesses sole proprietorship structure and owner’s overall concerns relating to the concerns with company liability, taxation, expansion, investment needs. I would recommend forming a limited liability company (LLC). A limited liability company combines the basic models of partnerships, C corporations, and S corporations. LLCs have members instead of partners or shareholder and for the most part a limited liability company is similar to an S corporation, but has some added advantages, and less disadvantages.
In most states, termination of an LLC may be brought on by numerous events, including passing of a member. However, most states allow the remaining members of the LLC to vote to continue the LLC. Contingent on the state law and the LLC’s operating contract, the election to continue may require approval of all members, or only a stipulated percentage of them, therefore allowing the business to continue instead of being dissolved as would happen with a sole proprietorship.
The liability concerns related to employee’s becoming injured on the job or injuring others while performing their job duties will be reduced and/or eliminated even if the company needs to hire outside help because the members of the LLC would not be held liable for employee actions while performing their job. Although the corporation could experience liability risks, the members themselves would not have personal liability and assets should be safe from legal action if a suit were filed against them. This should help ease the owners concerns of a suit or judgment possibly wiping out all personal assets.
The income tax of LLC is similar as the sole proprietorship and the company will not experience the double taxation of regular corporations in regards to dividends paid out to shareholders. The tax status should remain as long as local state laws do not change based on locations of future manufacturing plants as part of the company business development plan.
An LLC will allow the members of the