Frequently Asked Questions

What is a Limited Liability Company (LLC) and how does it operate?

A Limited Liability Company (LLC) is a distinct legal entity separate from its members. The liability of the company is confined to its own business funds and assets, and members are not accountable for the company's debts and liabilities. An LLC offers the operational flexibility of sole ownership and partnership businesses. The IRS treats it as a pass-through entity, meaning the company's profits and losses are combined with the personal income and losses of its members for federal taxes; there is no separate taxation at the company level. The owners of an LLC are referred to as members, and an LLC can have one or more members. The LLC can be managed by a member or an appointed manager, who can be from within the members or outside the LLC. The LLC operating agreement should specify whether the LLC is member-managed or manager-managed. Unlike a corporation, an LLC does not have a board of directors. However, members can hold business meetings to make important business decisions.