Forming an LLC HQ
A Limited Liability Company is a legal form that makes it possible for the owners of a company to limit their liability. The Limited Liability Company is only one of many business forms that can be used to achieve this, e.g. a C Corporation or an S Corporation.
So what is limited liability? Limited liability is a concept where an individual’s financial liability is limited to a fixed sum. As a shareholder/owner/member of a limited liability company or corporation, you can not loose more than what you have invested in the company. If you instead are a sole proprietor or a partner in a general partnership, you will be liable for all the debts of your business. This is known as unlimited liability and it is naturally a fairly hazardous form to use for your business venture since you risk loosing all your personal assets, including your house, you car and so on, if your business fails to pay its debts.
The Limited Liability Company form was created to make it easier for small business owners in the United States to achieve limited liability. This site will focus on the type of Limited Liability Company that you can set up in the U.S., but many countries have similar forms available. There is for instance the British “Limited liability partnership”, the Belgian “Société Privée à Responsabilité Limitée” and the Japanese “Godo kaisha” (合同会社). The LLC business structure available in the United States was heavily inspired by the German “Gesellschaft mit beschränkter Haftung” and by the business structure “Limitadas” that is available in many Latin American countries.
The first limited liability company act was adopted by the State of Wyoming in 1977 and was a special interest legislation for an oil company. Five years later, the State of Florida adopted their own LLC act. It would however take until 1988 before any other states followed in the footsteps of Wyoming and Florida, because the IRS tax treatment of LLC’s remained uncertain until that year. After the IRS revenue ruling of 1988, LLC acts begun to appear all over the country and by 1996 you could form an LLC in nearly every state. 1996 was also the year when the National Conference of Commissioners on Uniform State Laws adopted the Uniform Limited Liability Company act.
Information on forming an LLC in your state:
|
