Limited Liability Corporation - Shielding Your Business From Losses
The Limited Liability Corporation (LLC) is the most popular business type in all the states of America, and also, the District of Columbia. This business model has been successfully adopted from the business model of Germany that was popularly known as GmBH model. It has provided new meaning to the terms like business partnership and business corporations. There is nothing like personal loss or personal liability when it comes to Limited Liability Corporation. Tracing The History Of LLC The concept of the business model called Limited Liability Corporation has been inspired from the GmBH model of Germany and also, from the limitadas model of business followed in the ancient Latin American countries. It was in the year 1977 that the state of Wyoming employed the model for the first time in United Sates. After a long period UK followed the trend in 2002 and came up with concept of Limited Liability Partnership that was similar to LLC. In the year 2006, Japan introduced the business model godo kaisha that is based on LLC. There are other countries like Brazil, Chile and Croatia, who have come up with business models inspired by the concept of LLC. Comparison Between Corporation And LLC A LLC is basically the higher version of a corporation, as it has more advantages to offer as compared to a simple corporation. While a corporation lays restrictions on the number of members, a LLC offers no such limitation on the number of members it can have. Moreover, there is no requirement for holding the board meetings on the annual basis in a LLC, as is required in the case of a corporation. There is no provision for single membership in the case of LLC. There are business houses with more than one owner. Thus, a LLC doesn't provide the space for single ownership. This means that a single member is not directly liable for the losses incurred in the business. Also, the membership is not transferable without the approval of all the members of LLC. Are You Eligible For Forming LLC The eligibility of forming a LLC depends upon the rules and laws of the state in which your business is located. For instance, the banks and insurance companies are not facilitated to enjoy the status of LLC. Moreover, there are many states that disallow professionals like doctors and lawyers to form LLC. The LLC are expected to pay a fair amount of fees to the state government on the annual basis. The Limited Liability Corporation has emerged as the latest business entity in the corporate world and has shared a valuable status amongst business houses. With a number of advantages in hand, these corporations are the most flexible business tools. There are a number of options available to form a limited liability corporation that include single member LLC, member managed LLC and manager managed LLC. The business model is applauded by a number of business houses and thus, has gained the momentum in recent times. |