What is Limited Liability Company (LLC)?

 

Limited Liability Company in the United States is a relatively new type of company nature, which combines the limited liability of Stock Corporation and the individual tax system of partnerships. The owner (or the member) of Limited Liability Company can be individuals or the corporate entity of any type of company nature, which comes from any place of the world and with no limitation of the number.

When registering the Limited Liability Company in Delaware, the expatriates of non-permanent residents in the United States do not need to pay any U.S. federal taxes for the commercial transaction outside the United States.

American customers may choose register the Limited Liability Company for tax preference, but the main reason is that, for the creditors, LLC can protect the interests of the owners at the largest degree. In the Stock-Corporation, there are some forms and procedures that must be followed, such as meeting of shareholders and directors, meeting records, management staffs and the election of the Board etc. but creditors may use these to let the individuals take the debt obligations. While in the Limited Liability Company, all those forms and procedures can be canceled, which is very difficult for the creditors to recover personal responsibility.

Otherwise, the creditors of the LLC members can not control the assets of the Limited Liability Company or the voting right of the member like in the Stock-Corporation.

LLC a business entity with mixed nature, which combines the advantage of Stock-Corporation and Partnership. Like Stock-Corporation, Limited Liability Company has legal entity which id separate and distinct with its owner. And its owner and the management staffs do not need to take personal responsibility for the debts of the company. Like Partnerships, LLC enjoys the tax treatment of non-taxable entities. Applying the feature to the trading revenue outside the U.S. the non-resident expatriates can be exempt from all the taxes of the United States when registering a Limited Liability Company.

The operations and management of Limited Liability Company is regulated by the written agreement signed by the owners. The agreement does not need to be public or disclose to Delaware Corporation Affairs. So, the Limited Liability Company allows protecting the private personal information. And it also creates a management structure based on the needs of the customers and regulates the economic relationship among the owners. Owners prepare agreement with any language and without translating it to English.

The Statute Law of Limited Liability Company in Delaware allows the self-defined business relations in the written agreements, the so-called “freedom of contract”. Delaware Law only make provision for the matter that cannot reach agreement. The guide policy of the law is, let the “freedom of contract” maximize its effectiveness and implement the LLC agreement effectively. Delaware Act provided that such freedom of an agreement that any other LLC Statute Law is incomparable.

Select the appropriate option when you apply for Employer Identification Number (EIN). Limited Liability Company in Delaware will be regarded as a Partnership in paying federal income tax, without the limitation of federal income tax. In this sense, for the expatriates of non-permanent residents in the United States, Delaware is more attractive than other coastal areas. Combined with efforts on the financial infrastructure in the United States, you will find that Delaware has a considerable advantage.

Although Delaware law allows the owner of Limited Liability Company manage the company, the owner is not required to be a manager. More importantly, law regulates that, any owners or managers need to take individual responsibility of the company debts only for being the owners or the managers. Compare with the limitation of personal responsibilities favored by the shareholders of Stock-Corporation in Delaware, this clause also has advantage.

Select the appropriate option of SS-4, Limited Liability Company in Delaware will be regarded as a Partnership in paying federal income tax, without the limitation of federal income tax, which means Limited Liability Company in Delaware enjoy the tax preference like S-Corporation and Limited Partnerships, including the income distribution by written agreement and ensuring the distribution (the distribution is differ from the economic benefits of the owners of Limited Liability Company), and providing the owners the foundation of responsibilities on the personal debts. On the distribution of income tax, Limited Liability Company in Delaware is more flexible. So, as a valuable way, it can be used to estate planning and wealth transfer.

Factors:
●If select partnership tax items in the SS-4 Form, you do not need to pay corporation tax to IRS (Internal Revenue Service).
●The creditors of the owners of Limited Liability Company can not control the assets of the company and the voting rights of the owners.
●Limited Liability Company in Delaware enjoys the freedom of contract unmatched by other states.
●The required forms of Stock-Corporation such as meeting records, bye-laws, meetings, management staffs and directors can be canceled in the agreement of the Limited Liability Company.
●Like Stock-Corporation, the responsibilities taken by the owners and the managers are limited only by the amount of the investment of the company. 

 

Generally used for:
●Preservation of properties (real estate, boats, airplanes etc.)
●Individual-owned enterprises
●Family businesses and small partnerships
●Joint ventures