A limited liability company (LLC) is a hybrid structure that allows owners, partners or shareholders to limit their personal liabilities while enjoying the tax and flexibility benefits of a partnership. Under an LLC, members are shielded from personal liability for the debts of the business if it cannot be proven that they acted in an illegal, unethical or irresponsible manner in carrying out the activities of the business.
“Limited liability companies were created to provide business owners with the liability protection that corporations enjoy while allowing earnings and losses to pass through to the owners as income on their personal tax returns,” said Brian Cairns, CEO of ProStrategix Consulting. “LLCs can have one or more members, and profits and losses do not have to be divided equally among members.”
The cost of forming an LLC comprises the state filing fee and can range from $40 to $500, depending on the state you filed in. For example, if you file an LLC in the state of New York, there’s a $200 filing fee and $9 biennial fee. Further, you must file a biennial statement with the NY Department of State. [Check out our step-by-step guide on how to start an LLC].
Although small businesses can be LLCs, some large businesses choose this legal structure. One example of an LLC is Anheuser-Busch Companies, one of the leaders in the U.S. beer industry. Headquartered in St. Louis, Missouri, Anheuser-Busch is a wholly owned subsidiary of Anheuser-Busch InBev, a multinational brewing company based in Leuven, Belgium.
Examples of LLCs
The LLC is typical among accounting, tax and law firms, but other types of companies also file as LLCs. Well-known examples include:
- Hertz Rent-a-Car