LLCs
A limited liability
company ("LLC") is created by filing a certificate of organization with
the Pennsylvania Department of State . The owners of the LLC are called "members."
An LLC is a hybrid business entity. It is like a corporation in that the members
of the LLC have limited liability protection and can participate in management
and control. But it is like a partnership for tax purposes in that the LLC pays
no income tax, but rather passes its income through to its members.
Management: The members
of the LLC usually have an operating agreement to set forth how the LLC will be
managed. All of the members may share in the management of the LLC, or the management
may be delegated to a manager.
Liability: Members
are not personally liable for the LLC debts, obligations or liabilities or for
the acts or omissions of any other member, manager, agent or employee of the LLC.
Members, however, are liable for their own tortious conduct.
Taxation: An LLC
is classified as a partnership for federal income tax purposes. This pass-through
status allows the LLC's members to be taxed only once on their individual returns
and not also on income earned by the LLC as a separate entity.
Continuity: A limited
liability company does not have continuity of life. An LLC is dissolved upon the
first to occur of the following. (1) the time or happening of events specified
in the certificate of organization or in the operating agreement; (2) the unanimous
written agreement or consent of all members; (3) the bankruptcy, death, retirement,
resignation, dissolution or expulsion of any member, or the occurrence of any
other event that terminates the continued membership of any member, unless the
LLC's business is continued within 90 days (a) by the vote or consent of all remaining
members, or (b) pursuant to a right to continue stated in the operating agreement;
or (4) entry of an judicial dissolution decree.
Transferability:
The operating agreement among the members will generally restrict if not prohibit
the transferability of a member's interest in an LLC.
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