Tuesday, August 20, 2013

The Basics of an LLC

       A number of our clients often ask what the characteristics and benefits of a Limited Liability Company or "LLC" are.   Here are a few of the basic principles and characteristics of an LLC:
  • In general: An LLC is a hybrid between a sole proprietorship or partnership and a corporation. It combines the income tax “pass-through” treatment of a sole proprietorship or partnership with the limited liability protection accorded to corporate shareholders.
  • One Member Required:  An LLC can have as few as one Member (owner).
  • Separate Legal Entity:  Like corporations, an LLC is recognized as a separate legal entity from its “Members.”
  • Limited Liability:  Only the LLC is responsible for the company’s debts. This shields Members from individual liability for the acts and debts of the LLC.
  • Management and Control:  Management and control of an LLC is vested with its Members unless the Articles of Organization provides otherwise.
  • Voting Interest:  Ordinarily, voting interest directly corresponds to interest in profits, unless the Articles of Organization or operating agreement provide otherwise.  The interest of the Members must add up to 100%.
  • Transferability:  No one can become a Member of an LLC without the consent of Members having a majority in interest (excluding the person acquiring the membership interest) unless the Articles of Organization provide otherwise.
  • Formalities:  The existence of an LLC begins upon the filing of the Articles of Organization with the Secretary of State.  The Articles must be on the form prescribed by the Secretary of State.  To validly complete the formation of the LLC, members must enter into an Operating Agreement.  This Operating Agreement may come into existence either before or after the filing of the Articles of Organization.
The Williams Law Group can have your LLC up and running in less than a week.  Our attorneys will take care of registering your LLC with the Arkansas Secretary of State, preparing the Articles of Organization, drafting the Operating Agreement and obtaining a federal tax number for the LLC.  If you would like more information about forming a corporate entity just call us at 479-633-8421.

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