1.What is an LLC?
An LLC is a limited liability legal entity created under state law. Once created, an LLC is its own legal person separate and apart from its owners. The great thing about an LLC is that it was created to provide business owners with the advantages of the other legal entities without their disadvantages. Because of this, the LLC has greatly surpassed the corporation as the entity of choice for small business owners. |
2.What is a Member of an LLCA "Member" of an LLC is an owner of the LLC. A Member is to an LLC what a shareholder is to a corporation. Accordingly, the Members of an LLC own membership interests in an LLC. |
3.How do you evidence an ownership interest in an LLC?Ownership interests in an LLC are usually represented by either issued membership interests or issued membership units. These units of ownership are analogous to shares in a corporation. |
4.What is a Manager of an LLC?A "manager" of an LLC is a person or entity that has been elected by an LLC to have general authority to manage and operate the LLC business. Not all LLCs have managers. In order to have managers, the LLC must be manager-managed. If an LLC is manager managed, the members (owners) of the LLC usually elect the managers to run the LLC. Sometimes the managers will actively operate the LLC while other times (especially with larger LLC businesses), the managers will actually appoint other persons as officers to run the day to day operations of an LLC. If an LLC is member managed, then the members act as the managers of an LLC. |
5.What are Membership Certificates? Are they required?The LLC laws in all states do not require that membership ownership be evidenced by Membership Certificates. However they do allow ownership to be evidenced by Membership Certificates. In those LLCs with more than one member, it may be a good idea to evidence the issued ownership interests with membership certificates. If you are planning on bringing in investors to your LLC, the investors will usually rquire that their interests be evidenced by membership certificates. The LLC Expert offers customized membership certificates. Click Here for more details. |
6.What is a Registered Agent?Every state requires that an LLC have a registered agent properly appointed by the LLC in the state records. A Registered Agent is the official, appointed person who is legally authorized to accept legal papers delivered to the LLC in the state of formation. The Registered Agent must have a permanent physical address located in the state where legal papers can be delivered and accepted in person during business hours. Some states impose additional requirements upon who can be a registered agent for an LLC. |
7.How does a Limited Liability Company (LLC) provide personal lawsuit protection?The limited liability protection afforded by an LLC basically states that members of an LLC are not personally liable for the debts and liability of an LLC merely because they are members. Many business owners use LLCs because a properly formed and maintained LLC will protect them as a member in the event the LLC gets sued for business related liability. Please note that you, as a member, can do things that are not covered by this limited liability protection such as personally agreeing to be liable for a debt (like signing a mortgage in your individual capacity) or if you are personally at fault for negligent or fraudulent actions. The LLC provides a baseline blanket of protection between the LLC as an entity and its members only. |
