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LLC's should not be confused with corporations! LLC's are run by written agreement, whereas corporations are run by control of the stockholders.
LLC's are reasonably new entities that are being utilized increasingly over S corporations and partnerships as a way to enjoy the personal asset protection of a corporation, the flow-thru tax treatment in partnerships, and for the avoidance of numerous technical rules applying to S corporations. There could be some disadvantages however due to the newness of this type entity, and possible unfavorable tax consequences in your particular state. The LLC is generally considered a partnership with a corporate type liability umbrella attached.
You should seek expert tax advice prior to forming an LLC. A number of our clients have formed LLC's only to discover later that they have established the wrong entity for their needs. Also be aware that "your state" may seek to tax you as a corporation—talk with your tax advisor!
Membership: Members of LLC's may be any person or entity, trust, nonresident alien, partnership, corporation, or other domestic, or foreign LLC.
Management: In an LLC, a "member" is a person owning an interest in the company much the same as a stockholder in a corporation. A "manager" is a person elected by the members to run the company and would be analogous to the general partner in a limited partnership. LLC's are typically, although not necessarily, run by a manager. The company must be formed with one or more "managers", or if there are no managers, one or more "members"; and an organizer.
Formation: An LLC can be formed with one manager or one member and; an organizer and resident agent (CHQ). At all times after commencement of business, the company must have no less than one member to satisfy the requirements for Nevada. (The IRS however, may require at least 2 members when seeking partnership taxation.) One person can run an LLC as a member or, as a manager and a member.
Before commencement of business, consider drafting an operating agreement. Like the partnership agreement in a limited partnership, the operating agreement should detail the affairs and conduct of the business as well as the rights of the participants.
CHQ Incorporated provides business incorporating and resident agent services. We are not a law or legal services firm and do not render legal advice or counsel. We strongly advise that you consult with an attorney prior to forming or operating any legal entity.
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