Presentation Transcript

1. Limited Liability Corporations

   Anissa Akey, Sarah Gold, and Sarah Mitchell Introduction to Business and Technology 2nd Period
2. Definition A Limited Liability Company (LLC) is a business structure allowed by state statute. Different states have different rules that the companies must follow.
3. Five Advantages Flexibility: means it has a more flexible management structure than a corporation. This way business owners can generate a structure personalized to the business owner’s requirements. Limited liability: LLC keeps owners and shareholders from personal liability in case of judgments or debts against the business. Tax options: LLC can choose whether it wants to be taxed as just a proprietorship, partnership, S corporation, or corporation. Fewer compliance issues: LLC doesn’t need to have an annual meeting, and the LLC isn’t required to have a board of directors in most cases. Plus, there’s less paperwork needed in comparison to a corporation. Perpetual existence: LLC has a life of its own (just like a cooperation) and can continue to be present after the owners sell their shares or die.
4. Five Disadvantages Pass-through taxes: means that profits and losses are reported on each owner’s or shareholder’s individual tax return, whether or not the shareholders receive dividends. The LLC may be more suited to a one-person owner situation, unlike shareholders Raising money: There is not a very strict corporate structure or pass-through taxation, so investors may be cautious when putting their money into an LLC. Additional taxes: Many states require LLCs to pay a franchise tax or “capital values tax.” Less structure: Because there are no strict requirements for governing, the business could have problems later on. This is unless there is a detailed operating agreement, which requires fees. Capital Requirements: It may be hard to raise capital since investors like funding and companies that sell stocks. The capital requirements can be met by selling ownership interest.
5. Setting up a Limited Liability Company 1) Pick a name suited to your business venture that follows all rules 2) Must get registered agent: a person or business nominated by your company to officially send and receive papers on your behalf 3) File Articles of Organization ($100 nonrefundable fee for submission) 4) Operating Agreement: a legal document describing ownership and operating procedures.
6. How it’s Taxed Limited Liability Companies are not separate taxable entities like corporations IRS refers to LLCs as “pass-through entities” Owners and co-owners are taxed personally, but owners can be taxed like a corporation by filing a form with the IRS Owners of the LLC pay taxes on their share of the company’s profit
7. Examples of Business Ownership The Chrysler Group is an example of a limited liability corporation Other examples of LLC’s include Blockbuster, Domino’s Pizza, and Albertsons