November 19, 2017

LLC – Limited Liability Co.

A limited liability company, or LLC, is a business entity created under state laws which has the characteristics of both a corporation and a partnership. An LLC is becoming the most popular way to start a business due to the following advantages:

  • LLCs are easy to set up and maintain
  • Members are typically not liable for the debts of the LLC
  • Income and losses can be passed through to members as in a sole proprietorship or partnership
  • LLCs do not have the same corporate formalities as a corporation
  • An LLC has a flexible management and ownership structure.

GET STARTED on your LLC today !

More about forming a Rhode Island LLC

Like a corporation, a limited liability company or an LLC, is a separate and distinct legal entity. This means that an LLC can obtain a tax identification number, open a bank account and do business, all under its own name. The primary advantage of an LLC is that its owners, known as members, are not personally liable for the debts and liabilities of the LLC. For example, if an LLC is forced into bankruptcy, the members will not be required to make up the difference with their own money. If the assets of the LLC are not enough to cover the debts and liabilities, the creditors cannot look to the members, managers or officers for recovery.

 

An LLC can be taxed either as a “pass-through” entity, like a sole proprietorship or partnership, or as a regular corporation. By default, an LLC is taxed as a pass-through entity, and the owners of the LLC are not subject to double taxation. This is different from a regular corporation, which pays a corporate tax on its net income (the first tax). Then, when the corporation distributes profits, the stockholders pay income tax on dividends (the second tax). With an LLC, the profits “pass through” to the owners who pay taxes at their individual tax rates.

 

Have More Questions ?

Contact the RI business attorneys at the Rhode Island law firm of Bardorf & Bardorf with any questions regarding establishing an LLC business in Rhode Island.