Quick LLC Facts


If you’re in the market for a new LLC for a business venture or real estate investment, here are some quick facts to help you get up to speed on this great business structure option:

AN LLC …

  • May be run by all of the Members equally, by an elected Committee of Members, or by an elected group of Managers, where all Members are passive (like Shareholders in a Corporation)
  • In a Member-Managed LLC, all members participate equally and any one member can bind the company
  • In a Manager-Managed LLC, members are passive (like limited partners) and only Managers can bind the business
  • Members financial liability to the LLC is limited to the amount of their investment
  • Members and Managers are indemnified against the acts, deeds and debts of the LLC unless fraud, breach of fiduciary duty or criminal activities are carried out
  • No restrictions on the number or location of owners; however, non-US residents are required to have tax withholdings made on distributions of income before the money leaves the US
  • Elects how it will be taxed. Taxes could be reported on a:
    • Schedule C, where the LLC operates a business (the default for single owners and couples who are married, filing jointly)

    • Schedule E, where the LLC holds real estate or other investments (single member, passive, default)
    • Form 1065 (two or more members, partnership, default)
    • Form 1120S (LLC elects S Corp tax status)
    • Form 1120 (LLC elects C Corp tax status)

There are many variables when you’re structuring a business. That’s why it’s hard to go through a quick-service website. Unless you talk to someone who’s got some knowledge and experience on both the tax and the legal side, it’s hard to know what you don’t know. And that can leave you vulnerable.

Got questions? Contact us! We’re here for you.

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