1. An LLC generally
protects its owners
from personal
liability for
business obligations
in much the same way
a corporation does,
but an LLC is not a
corporate entity.
2. An LLC must be
organized in a
specific state,
however, like a
corporation, it can
do business in
multiple states.
3. The owners of the
LLC are called
members and there is
no limit on the
number of members an
LLC and have. Also,
members do not
necessarily have to
be individuals,
corporations, or
other LLCs may be
members. The
members’ management
roles are set forth
in an operating
agreement.
4. Upon the
formation of the
LLC, the members
contribute cash,
property or services
to the LLC in
exchange for LLC
shares or units.
5. An LLC may borrow
money in its own
name and is
responsible for the
repayment of the
debt.
6. An LLC is usually
treated as a
partnership for
federal income tax
purposes.
7. Like partners,
LLC members are not
considered employees
of the company.
However, the LLC can
have non-member
employees.
8. LLC members are
taxed directly on
company income. The
LLC itself doesn’t
pay federal income
taxes.
9. If an LLC has a
loss, its members
generally can deduct
their share of the
loss on their own
tax returns.
10. For tax
purposes, an LLC’s
income and losses
are divided among
its members
according to the
terms of their
agreement. Tax
allocations must
correspond to
economic allocations
of profit and loss.
