Barely Legal Advice Blog's What is a Limited Liability Corporation actually a good job of describing what is a LLC.
The article discusses how they compare to corporations, how they compare to partnerships, and their advantages and disadvantages. (There is another article here that covers about the same territory but I like Barely Legal's article better. Which explains why I am picking on it.)
Some points I agree with:
and1. Due to its newness, there are still few statutes governing LLC establishment. It only adopts applicable statutes governing partnerships and corporations.
The first point makes every break up of a LLC an adventure - especially as so many people refuse to follow the advice in the second point.For Limited Liability Corporation Establishment, it is judicious to seek advice from a Business Lawyer who can help you construct the agreement, by-laws, property distribution agreement, rules and regulations, and other complicated administrative matters.
I disagree with the following if these "advantages" trump other business entities:
1. Since the members are taxed at a personal level, double taxation is avoided.
2. It requires less paperwork compared to a corporation.
Most small incorporations qualify as Subchapter S corporations and so (at least) negate the advantage of number 1. As for the second, I am not sure of what paperwork there is less of - I find the LLC's operating agreement a lot of paperwork.
I have other articles here on limitied liability companies and I will have more over the next month or so (jsut follow the "Limited Liability Companies (LLC)" link below). Yes, they are popular. Yes, they are relatively easy to set up. But all that ease creates the opportunity for serious problems. Please get informed before you decide you want to use the LLC format for your business. Then give me a call to help you get the job done right.