Limited Liability Company or LLCs have long been a traditional form of business structure in Europe and Latin America. LLCs were first introduced in the United States by the state of Wyoming in 1977 and authorized for pass- through taxation (similar to Partnerships and S Corporations) by the IRS in 1988. With the recent inclusion of Hawaii, all 50 states and Washington, D.C. have now adopted some form of LLC legislation for both domestic and foreign (out of state) limited liability companies.

Many business professionals believe LLCs present a superior alternative to corporations and partnerships because Limited Liability Companies combine many of the advantages of both. With an LLC, the owners can have the corporate liability protection for their personal assets from business debt as well as the tax advantages of partnerships or S Corporations. It is similar to an S Corporation without the IRS' restrictions.

Advantages

• Protection of personal assets from business debt
• Profits/losses pass through to personal income tax returns of the owners
• Great flexibility in management and organization of the business
• LLCs do not have the ownership restrictions of S Corporations making them ideal business structures for foreign investors

Disadvantages

LLCs often have a limited life (not to exceed 30 years in many states) Some states require at least 2 members to form an LLC, and LLCs are not corporations and therefore do not have stock -- and the benefits of stock ownership and sales.

As with the S Corporation listing, these lists are not inclusive. For more detailed information, please be sure to speak with a qualified legal and/or financial advisor.