At Kozloff Stoudt Attorneys, our skilled legal team is experienced in practicing business law for companies throughout PA. For over 70 years, our attorneys have provided both consultation and advocacy services for various business entities navigating the complexities of corporate law.
Decisions as to the corporate form selected by a startup business can play a crucial role in the manner in which they are governed. There are three main types of business entities:
- Limited Liability Companies (LLCs)
In this blog entry, we will provide a brief overview of limited liability companies and the specific legal advantages that they can provide to their members.
An LLC is a hybrid business entity that combines the limited liability features of a corporation with the tax flexibility offered by a partnership. The owners of LLCs are called members, who may be individuals, partnerships, estates, trusts, corporations, governmental entities or even other LLCs. A so-called “single-member LLC” can be formed and controlled by a single person. The liability of an LLC is limited to its value, minimizing the downside risk borne by its members. This perk usually protects members of the LLC and their personal assets from debt or lawsuits filed against the LLC. Since the Internal Revenue Service does not consider an LLC to be an entity separate from its members, income tax liability passes through the limited liability company and is assigned directly to its members, avoiding double taxation.
Although each state has its own regulations for LLCs, these business entities can be governed rather informally by their members when compared to other corporate forms.
When selecting the name of a limited liability company, Pennsylvania does have some rules that must be adhered to:
- The name must be different than the names of every other LLC organized under the laws of Pennsylvania.
- The name must not imply that it is a bank, trust, credit union, insurance company, governmental agency, or public utility.
- The name must contain the term “company,” “limited,” “limited liability company,” or an abbreviation of one of those terms.
You can learn more about LLC formation and the many other ways that Kozloff Stoudt’s distinguished business attorneys and legal professionals in PA can assist business clients by calling 610-370-6700 or filling out a contact form on our website.