What is a Limited Liability Company or LLC?
Gregory Gilman, CEO of RxVantage (www.rxvantage.com), during this video he talks about what a Limited Liability Company is. This information will give you some insight on the legalities of an Limited Liability Company.
- Requires minimal setup & easy to operate
- Pass-through tax benefit of a partnership plus liability protection of a corp
- Allows one or more owners & the ability to raise capital through sale of membership interest
- Filing requirements differ for each state
I am an entrepreneur but I am also a lawyer. So I get asked the question about an LLC all the time. What exactly is it? And quite frankly, it is probably the most common entity type that an entrepreneur will set up.
And that is because it is quite easy to form and there are reduced operating requirements with a Limited Liability Company as compared to a Corporation.
It also has the advantage of having pass-through taxation, the same treatment that a partnership would have for example but then on top of that, it has a limited liability protection of a corporation exactly as the name implies.
An LLC allows for one or more owners. It also allows the owners of the LLC to raise capital by the sale of membership interests rather than shares as they would with a corporation.
LLC’s are governed by state law so it varies from state to state but in general, an LLC is probably the first place most entrepreneurs will look when they want to set up a new legal entity for their business.
In my opinion, an LLC offers a great option for a first time entrepreneur because they are very easy to manage especially relative to a corporation. They have the pass-through taxation treatment of a partnership and they are easy to set up.
So, I think most first time entrepreneurs in particular should think about an LLC as their first option.