Much like the use of Trusts and our growing fondness on said use, we find more and more uses for LLC’s
Notably the Real Estate (especially commercial) were pioneers in using LLC’s, naturally due to their exposures and inherent risks.
Happily with more and more LLC’s in our office and more questions about them, we pulled a few interesting background information for your perusal… but before we jump into that… two set up warnings…
- Mind the taxes – Be sure to interface with your tax professional when setting these up and make sure you are not accidentally burying yourself under a load of unnecessary filings…
- Mind the holdings – An LLC is designed to give you protection…. but if you put everything in it, you may be diluting the benefit
Attorney and Tax professionals are your go to folks on setting this up correctly…..
Recall the old saying “Measure twice cut once!”
We think if fits well!
Background and LLC Details
A limited liability company (LLC) is a business structure in the U.S. that protects its owners from personal responsibility for its debts or liabilities. Limited liability companies are hybrid entities that combine the characteristics of a corporation with those of a partnership or sole proprietorship.
What Is Limited Liability?
Limited liability is a type of legal structure for an organization where a corporate loss will not exceed the amount invested in a partnership or limited liability company (LLC). In other words, investors’ and owners’ private assets are not at risk if the company fails.
The limited liability feature is one of the biggest advantages of investing in publicly listed companies. While a shareholder can participate wholly in the growth of a company, their liability is restricted to the amount of the investment in the company, even if it subsequently goes bankrupt and has remaining debt obligations.
Also from the IRS
A Limited Liability Company (LLC) is a business structure allowed by state statute. Each state may use different regulations, you should check with your state if you are interested in starting a Limited Liability Company.
Owners of an LLC are called members. Most states do not restrict ownership, so members may include individuals, corporations, other LLCs and foreign entities. There is no maximum number of members. Most states also permit “single-member” LLCs, those having only one owner.
While it may sound neat to have an LLC, be forewarned if you set one up and do not really need one, you have garnered yourself unneeded work!
Have a Great “LLC Review” Day!
John A. Kvale CFA, CFP
Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth