Limited Liability Company is a commercial structure through which the shareholders will have limited liability towards the actions of the company. Through, this the company:
- can avoid double taxation,
- flexibility in the income distribution is possible
- Also attracts foreign investors.
The company must have several members, so that there would be different entries for US federal taxpayer ID number such as for:
- C Corporation
- S corporation
Administration structure of Limited Liability Company
- If Limited Liability Company would be administered by member of the administration then the organization would be flat partnership constitution.
- if limited liability company is managed by the manager of the administrative department then the structure would be two-tiered administrative organization which can be converted in to corporation.
- A document called "rules of organization" or "articles of the organization" is required to form a limited liability company.
- This document should be collected from the secretary of the state.
- Along with the document an "operating agreement" is also needed and this should be specified by the members privately.
- This operation agreement is a type of indenture, which comprises the operational and distributional structure of the company's income, administrative structure and the configuration of the membership that governs limited liability company
- The limited liability company members are responsible for the administration, maintenance and management affairs of Limited Liability Company.
- The members are regarded as the actual owners of limited liability Company in some states whereas; in some countries the managers are declared as to control the sole power of Limited Liability Company.
- But in both the cases the articles of organization and agreement are necessary requirement without which a limited liability company cannot be formed.
- Thus, limited liability Company with a partnership structure is more beneficial.
Benefits of Limited Liability Company
Limited Liability Company is of immense importance in the corporate structure
- Few of them are like the boards of directors are always safe in limited liability company organized structure as there is no loss of power.
- Limited Liability Company has some flexibility like in some states it can be formed with the involvement of one person only.
- General meeting for share holders once in a year is not required in a limited liability company organization and the paper works for administrative purpose and for record keeping section is also not so much of importance like corporation.
- In a limited liability company structure, profits are taxed personally to the members and no to the limited liability company organization.
- In limited liability Company as the members interests are assigned separately so the financial advantages are also assigned separately.
- Until limited liability company is chosen to be taxed till then the profits and income from the foreign source are maintained by the members.
Drawbacks of Limited Liability Company
Although, limited liability company has lots of advantage but still the drawbacks cannot be ignored.
- There may be difficulty in raising economic capital as the limited liability company investors are more relaxed in investing funds in a corporate structure towards a final IPO.
- The principals of limited liability company is referred as the various posts like:
chief executive officer
So, it is difficult to decide the actual governing body that would enter in to the contract on behalf of Limited Liability Company.
- In limited liability company agreement no public involvement is required so the members who operate may suffer problems in future.
Limited liability Company Registration Terms
- The registration fee for Limited Liability Company varies according to states which are form fifty US dollar to five hundred US dollar. Thus, it is very beneficial for the small as the big companies.
- Before filling up a registration form a statutory charge of three hundred US dollar is required and need to be submitted first.
- The charges can be paid either by cash or through credit cards.
Names of Texas Limited Liability Company
- The Texas limited liability company also should the term limited liability company. Abbreviation may be used like for company it can be used as Co and for limited it can be used as Ltd.
- Also the similar names cannot persist for foreign or domestic corporations.
Information of Director
- Texas Limited Liability Company must posses both one or more than one director and the person chosen for director must be at least more than eighteen years old.
- The directors must be listed in the articles of organization whereas the information of the stock transfer must be dealt with the corporate office.