Limited Liability Company (LLC)

The services described elsewhere on this website that The Corporation Secretary provides to corporations are also available to limited liability companies (LLCs) at the same cost.

LLCs are a relatively new business structure allowed by state statutes. Over the past 20 years 47 states and the District of Columbia have passed legislation providing for the formation of LLCs (legislation is pending in Hawaii, Massachusetts and Vermont).  Many businesses are now formed as LLCs rather than corporations.

LLCs have become popular because, similar to a corporation, the owners (called "members") have limited personal liability for the debts and actions of the LLC, that is, the members are at risk only to the extent of the value of their ownership interest in the LLC. Most states do not restrict ownership of interests in a LLC. Members may include individuals, corporations, other LLCs and foreign entities. There is no maximum number of members. Most states also permit "single member" LLCs, which are LLCs having only one owner.

Apart from limited liability, other features of LLCs are more like a partnership, providing management flexibility and the benefit of pass-through taxation. Under IRS rules, a LLC with at least two members can choose to be classified as an association taxable as a corporation or a partnership, and a single-member LLC can choose to be classified as either an association taxable as a corporation or disregarded as an entity separate from its owner. LLCs with multiple owners that do not elect to be taxed as a corporation are taxed as a partnership.

There are few required formalities in the management and operation of a LLC. Unlike state corporation laws, the laws governing LLCs do not make reference to annual meetings or the election of officers. Nonetheless, it makes good business sense for LLCs to adopt sound governance procedures. Meetings of members should be held periodically and the approvals of actions by the members, whether by vote or written consent, should be properly recorded and maintained in an organized manner. LLCs must also make an annual state filing in their state of formation and, if appropriate, qualify to do business in other states. The members can ensure that these tasks are accomplished by appointing a Secretary and assigning to that individual responsibilities comparable to those of a Secretary of a corporation.

When The Corporation Secretary performs this role for a LLC, we will handle the assignment just as we would for a corporation, except for the differences required by the form of organization and the nomenclature used in the records of meetings and written consents.

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