What is a Limited Liability Company?

Limited Liability Company – Combines the operational flexibility and favorable tax treatment of partnerships with the limited liability feature of a corporation.

LLC Facts to Know


  • Tax flexibility – By default, an LLC is treated as a “pass-through” entity for tax purposes, much like a sole proprietorship or partnership. This means that LLCs avoid double taxation. However, an LLC can also elect to be treated like a corporation for tax purposes, whether as a C corporation or an S corporation.
  • Ability to place membership interests in a living trust – Members of an LLC are free to place their membership interests in a living trust.
  • Contributions – members contribute in the form of cash, property, services, or promises to contribute cash or property or to perform services.
  • Property contributions. Contributing property to set up an LLC is not taxable, even for minority interest owners.
  • Ability to deduct losses. Members who are active participants in the LLC’s business can deduct its operating losses against the member’s regular income to the extent permitted by law.
  • Limited liability – a creditor may not seek satisfaction of any limited liability company debt against the personal assets of any member.
  • Tax advantage – the members each pay their share of tax on their share of profits avoiding double taxation of LLC profits.
  • Number (unlimited) and type of investors (can be individuals, LLCs, Corporations, Trusts, Partnerships) and there are no restrictions as to ownership unlike an S corp.
  • Non-transferable interest – a member may not transfer his voting interest without concurrence of all remaining members.
  • Ease of transferability – A limited liability company and all of its assets and accounts may be transferred by the simple assignment of an interest (stake) in the company.
  • Management – The management of the business and affairs of an LLC may be conducted by the members or, if the members agree, may be vested in a manager or managers.
  • Continuity of life – the term of existence must be stated in the Articles of Organization. In most States perpetual duration is accepted.
  • Can convert to a Series LLC (instead of using multiple LLCs) to segregate assets and liabilities.


  • Your state may impose income taxes on LLCs even though the IRS doesn’t.
  • Converting an S or C Corporation to an LLC may carry too heavy a tax price.
  • Unfavorable state tax rules and fees. In some states, an LLC must pay higher taxes and fees than would a corporation that generated the same revenues.

What is a Series LLC?

A Series LLC is a special form of a Limited liability company that provides liability protection across multiple “series” each of which is theoretically protected from liabilities arising from the other series.