| The term "LLC" is short for "Limited Liability Company" | | | | individual members of the company from being liable |
| and not, as some people erroneously presume, Limited | | | | for the company's unpaid debt, and at the same time |
| Liability Corporation. In fact, an LLC is set up specifically | | | | protects the individuals' credit ratings. Rather than a |
| by business members who wish to avoid the limitations | | | | situation where individual members of the company |
| that incorporation would place upon their business. The | | | | were too risk-averse - and thus limit the chances that |
| term, then, clearly separates the LLC from the | | | | the business has to grow and make a real difference - |
| Corporation. Although it is true that the two entities | | | | this practice allows businesses to operate with a |
| share some characteristics, it is important to note the | | | | degree of confidence which allows them to take bold, |
| differences. The fashion for creating businesses as | | | | innovative and potentially risky steps in the knowledge |
| Limited Liability Companies has grown in recent years, | | | | that the downside to their actions will be comparatively |
| as companies prefer to have the element of freedom | | | | low when the potential upside is taken into account. It is |
| that they consider an LLC gives them. | | | | unlikely that we would have half the successful |
| As the name suggests, an LLC is a popular way of | | | | companies we do have if the individuals involved had |
| doing business not least because it allows its members | | | | to commit their life savings to making things work. |
| to bear limited liability for company financial losses and | | | | An LLC can be created by a sole individual, or by a |
| debts. In a world where it is increasingly difficult to | | | | considerably larger group of people. Many of the |
| steer a business through its first few years - | | | | benefits of an LLC are predicated on the fact that it |
| immediacy being an unfortunate side-effect of | | | | will usually feature a larger number of people, but the |
| competition and of the higher stakes inherent in it - | | | | practice itself is not limited to that status. For an |
| many businesses feel that they cannot perform on an | | | | individual looking to "become" an LLC rather than |
| even footing, or anything approaching that, if they do | | | | operating as a sole proprietor, there are a number of |
| not have some amount of borrowing power. However, | | | | things to take into account. The fact is that becoming |
| and particularly in the present financial climate, many | | | | an LLC can involve a lengthy process and may not be |
| people quite reasonably consider borrowing and debt | | | | totally necessary. A rule of thumb to follow is that if |
| to be excessively risky. By forming an LLC, it is | | | | the business is going to take risks and act fast, LLC |
| possible to at least remove personal liability for debts. | | | | status is beneficial. Otherwise, sole proprietorship is |
| In an LLC, debts which are unpaid at the time that the | | | | more than adequate, and considerably more |
| business ceases trading must be met out of whatever | | | | convenient. |
| the business can raise - they are not transferred to | | | | Disclaimer: This article is for informational and |
| the members of the LLC. | | | | entertainment purposes only, and should not be |
| The dual positive effect of this is that it avoids the | | | | construed as legal advice on any subject matter. |