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Posts tagged LLC.
October 29, 2019
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Limited liability companies are entities chartered by the states, that are governed by a contract – typically called an Operating Agreement – among the owners. As a result, the owners/members of the LLC have great flexibility in creating the entity exactly like they want (purple unicorns!), but this can also result in important governance provisions to be forgotten.  

LLCs and Subchapter S Corporations share a number of characteristics. Chief among them is that each provides participants – shareholders in a corporation, members in an LLC – with insulation from personal liability while avoiding the “double taxation” associated with C-Corporation status.  Double taxation means that a C-Corporation pays taxes on profits and its shareholders pay taxes on distributions. However, Sub-S Corporations do not pay taxes at the corporate level.