What is an LLC?

April 29, 2024

Looking to start a business? Today, there are many different types of business structures available, each with its own set of rules. Finding the right one for you requires evaluating the unique features and benefits of each form. This careful consideration will ensure that you choose the structure best suited to your business needs and goals.

What is a Limited Liability Company (LLC)?

A Limited Liability Company (LLC) is a popular business structure that combines the advantages of both the corporation and partnership models. The defining feature of an LLC is that it provides limited liability to its members, meaning that their personal assets are protected from the company’s debts and liabilities. This safeguard allows members to take business risks without the fear of personal financial ruin should the business face any legal troubles.

Benefits of an LLC

Management Flexibility: LLC’s have flexible management structures in the sense that they are not required to have a formal board of directors like most corporations. LLCs can be managed by the business’s members or by a designated manager, which allows the owners to tailor the management structure to the specific needs of the business.

Fewer Regulations: LLC’s have fewer regulations and state-imposed requirements unlike most corporations. They do not need to have annual shareholder meetings, nor do they have any restriction put into place on how the profits should be distributed throughout the company. Businesses under this structure also can maintain much more relaxed record keeping, less rigorous reporting requirements and have flexibility on formation and dissolution of their corporation. 

Membership Versatility: LLC’s can have members that include individuals, partnerships, trusts, other LLC’s, corporations, and even international entities. This broad eligibility allows for a diverse range of participants in the business, facilitating varied investment sources and expertise. LLC’s also have no restrictions on the number of members in their corporation and have flexible ownership structures. 

LLCs are typically an appealing business structure for organizations that prioritize flexibility in management and profit distribution, desire fewer regulations as well as prioritize versatility in their membership regulations. These advantages make LLCs particularly desirable for small to medium-sized businesses, startups, and/​or family-owned companies that value simplicity and adaptability in their operations. 

Need help setting up your business as an LLC? Let our experienced team of attorneys at Ball Eggleston guide you through the process. We’re here to assist you every step of the way!