Limited Liability Companies
Most people that are going to incorporate a business will face a choice as to how to organize their business in a way that is most advantageous to their goals. A Limited Liability Company (LLC), like a corporation, will shield business owners from incurring any personal liability for business debts. Thus, a company's creditors generally cannot seek to collect against the owners' personal assets in the event there is a liability or judgment that the creditor seeks to collect on. However, a key difference between an LLC and a corporation is that LLCs do not incur the double taxation that applies to regular corporations. Instead, like partnerships and s-corporations, LLCs allow profits and debts to "pass through" to the owners (as K-1 income) for taxation purposes.
Unlike partnerships, LLCs may have a single owner whereas by definition, the partnership will have one or more owner. When there are multiple co-owners of a company, all of the owners of an LLC would be protected from personal liability, which is not the case with partnerships. Contrast this to limited partnerships, in which the limited partners are protected from company liabilities, but general partners are personally responsible for the partnership's debts.
An additional benefit of organizing a business as an LLC is that, unlike corporations, LLCs do not require ongoing compliance with formalities such as annual meetings of shareholders, board of directors, minutes, etc. in order to maintain the business structure's benefits.
The two biggest advantages that an LLC has over a corporation is the flexibility in structuring the ownership and management of the company, and the tax laws for calculating each owner's basis in the company for income tax purposes.
Operating agreements are similar to partnership agreements: they spell out each owner's rights and duties, each owner's percentage of ownership, and each owner's share of the company's profits. Like shareholder agreements, operating agreements may also set up procedures that would allow the company to continue operating after an owner's death, departure, or disability.
The attorneys at Kollias P.C. are well-versed and experienced in advising business clients in DuPage County, the Chicagoland area, and surrounding collar counties and are able to tailor a business structure that is best suited for each individual client. Before you start up a new business, contact the experienced DuPage County business planning attorney Daniel J. Kollias to explore the various structural options available to you, and assess the benefits and drawbacks of each. We can help you choose the best option for your company, prepare an operating agreement, and file the necessary Articles of Organization and other documents required to set up your company.
At Kollias P.C., we would welcome the opportunity to meet with you and help you decide whether forming an Illinois Limited Liability Company is the best option for your business. If you already have an LLC set up and simply need a lawyer to review or revise your existing, operating agreements and other LLC documents, please call us.
To schedule a free 30-minute consultation, please call us at (630) 407-1200, or fill out and submit our online intake form.