. LLC’s: Where do the profits go? | LAW Professor.com - Your Self Help Guide For Legal Advice - Hostgator Coupons 2015: Hostgator offers 2015 :- Now hostagtor hosting offers and get plans 2015 Hostgator Coupon 2015 . Now Hostgator Plan to provide coupons on 2015.
 
 

LawProfessor.com Exclusive Article



LLC’s: Where do the profits go?



More Options:

Print This Article Print This Article
Email This Article Email This Article


Share:

Post this Article to facebook Add this Article to del.icio.us! Digg this Article furl this Article Add this Article to Reddit Add this Article to Technorati Add this Article to Newsvine Add this Article to Windows Live Add this Article to Yahoo Add this Article to StumbleUpon Add this Article to BlinkLists Add this Article to Spurl Add this Article to Google Add this Article to Ask Add this Article to Squidoo
LawProfessor.com Exclusive

A limited liability company, or LLC, has a very unique personality, one that may take some getting used to for Americans. There is the partnership/sole proprietorship and the corporation. And then there is the LLC, which combines the benefits of both of these structures and in effect, is has its own identity. One of the key aspects of an LLC that is so different than in any other business structure is that the terms “shareholders” and “partners” can be tossed out and replaced with “members.”

What this means is a certain amount of great equality or inequality is possible. There can be one member or hundreds – it doesn’t matter, there’s no cap. In fact, a member can be a breathing human being or it can be a corporation. This basic makeup of an LLC is why profit sharing is sometimes hard to understand from the outside.

The owner of an LLC really can go about profit sharing however he or she likes. In partnerships, the profits are split right down the line. But in an LLC, they can be split in any which way. Moreover, an LLC can even be taxed as a corporation, meaning the owner(s) retain more profits. As the owner of an LLC, you basically get to choose how you want it to be taxed and who and where the profits go to.

There are a few pitfalls that come with this structure. First off, while the people up top have more power, this can mean bad news for more minor members. In corporations and partnerships, there is a required organization and while it can complicate and bore a company (who wants to keep meeting minutes?), it can also assure a smoother and fairer operation. Secondly, an LLC can’t live forever. Whenever a member dies or goes bankrupt, the LLC dissolves! That certainly can throw a wrench into an ideal profit sharing plan.

Still, another obstacle exists for LLC members when it comes to profit sharing. If they want to go public, it’s difficult to share profits. Same goes for sharing profits with employees – it’s not a practical move to make with an LLC. If you seek large-scale profit sharing, you probably should set up a corporation, not an LLC.

One important thing to note, however, is that there might be more profits to share in an LLC as double taxation is avoided, without the loss of protection of personal liability! This is of course one of the main reasons to form an LLC as opposed to a normal corporation.

It’d difficult to grasp any single concept with regard to LLC profit sharing, as it will vary from company to company. As it should. A large appeal of an LLC is that it can be managed in any way. This is great news for small companies who function well on their own and are all the more effective and profitable when they are given the reigns and can call the shots.



More Special offers:
Student Loans | Legal Forms | Student Credit Cards | Low Interest Credit Cards
Most Recent Article Additions to LawProfessor.com:


Legal Disclaimer: The information contained in this Web site LawProfessor.com is provided as a service, and does not constitute legal advice or establish an attorney client relationship. LawProfessor.com makes no claims, promises or guarantees about the accuracy, completeness, or adequacy of the information contained in or linked to this web site feature and its associated sites. Nothing provided herein should be used as a substitute for the advice of your own counsel.
 
Privacy Policy | Impulse Tickets.com | LetsGetCredit.com
Copyright © 2007-2011 Lawprofessor.com a subsidiary of Boxing Inisder LLC. All rights Reserved