Overview of Limited Liability Companies
The limited partnership is a mainstay for protection, but the newer limited liability company (LLC) promises to be an even more popular firewall.
More and more LLCs, or limited liability companies, are springing up. The limited liability company is the first significant new legal entity to emerge since the 1950s. It is already a favorite for asset protection and was initiated in Wyoming in 1977 to help mining developers attract foreign investors. By 1988, limited liability company legislation spread throughout the nation. Members of the limited liability company would be granted different benefits when compared to other types of corporations.
Other advantages make the limited liability company a superior business organization in many situations. The LLC is a hybrid entity and it features both the limited liability advantage of the corporation with the advantages of the partnership. More importantly, a member's interest in the limited liability company is protected. The member's creditor has only the charging order remedy as you have seen with the limited partnership (LP). Because the limited liability company is comparably protective to the limited partnership, it is equally as useful to title and protect a wide range of assets. Moreover, neither the limited liability company managers nor its members have personal liability for the debts of the limited liability company. It can then be an ideal entity to hold liability-producing assets, or to conduct a business. The limited liability company can offer significant benefits over the corporation and other business organizations.
Much of what we say here about the limited liability company applies as well to the limited partnership. Considering their similarities, it is not surprising that one lawyer may recommend a limited partnership and another a limited liability company. This doesn't necessarily argue against either since their distinction is so narrow.
Although the limited liability company's organizational, structural, and protective features closely follow those of the limited partnership; there are differences in terminology. Managers run the limited liability company. They compare to general partners in a limited partnership. LLC owners are members. They compare to limited partners. Here are other links that are vital to understanding LLC's:
YES, YOU CAN LOSE EVERYTHING!
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