A limited liability company, commonly referred to as an LLC, is a corporate structure in which the members of the company may not be held personally liable for the company’s debts or liabilities. A limited liability company can be formed by filing Articles of Organization with the Department of State. Some requirements of forming an LLC are
- An LLC must adopt a written Operating Agreement. This document will establish the rights, powers, duties, obligations, and so on, of the members with respect to the LLC
- The Articles of Organization or a notice regarding the formation of the LLC must be filed in two newspapers for six consecutive weeks
- LLCs are required to file Biennial Statements updating contact information every two years with the New York Department of State.
Limited Liability Companies: Debts & Business Liabilities
Limited liability companies are attractive to prospective business owners. The LLC can protect an owner from debt, liability, and any judgments that the business acquires. Also, business owners can be protected from personal liability in the event a law suit is filed against their business. However, protection is not absolute. LLC owners may incur liability in cases of personal guarantees, gross negligence in business decisions, or fraud or illegal activity.
Tax Benefits of a Limited Liability Company
LLCs are referred to as a “pass through” entities – profits and losses are reported on an owner’s individual tax return. For the IRS to ensure that the members of the LLC are properly reporting profits and losses, the LLC is required to file a Form 1065. I always refer a client to her accountant to decide whether an LLC, corporation, partnership or sole proprietorship will give her company the best tax advantages.
If you would like to know more about forming a business, or if you require legal advice on whether an LLC is the right choice for you, it is important to contact an experienced business law attorney.
If you require the services of an experienced Business Law or Bankruptcy attorney, contact the Law Offices of Allen A. Kolber, Esq. today to schedule a consultation and discuss your options.
