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Limited Liability Companies

The limited liability company (LLC) is a newer form of business entity. The organizational structure of an LLC borrows from the structures of both unincorporated entities and corporations. The benefit in forming an LLC is its flexibility, since someone who creates an LLC may form the entity to appear more like a partnership or more like a corporation, depending on the needs and preferences of the person who is forming it. An LLC may elect to be taxed as a corporation or as a partnership.

Although the LLC form of organizational structure may provide some benefits, the use of the LLC for nonprofit entities is not well settled. Questions about the taxation of a nonprofit LLC have yet to be answered, and in some states, state law is not clear whether an LLC may be formed for nonprofit purposes. On the other hand, this form of entity provides flexibility in terms of structure and may be preferable to some nonprofit entities.

Inside Limited Liability Companies