Limited Liability Entities
Read this section. Limited liability companies (LLCs) are a relatively new form of business organization in the United States, but they have already been widely adopted, particularly by small businesses. With the many formalities and structural requirements required of corporations, LLCs offer a simpler alternative that is more suited to small businesses. Note, in particular, the similarities and differences of LLCs versus sole proprietorships and corporations. Why does the text refer to LLCs as a "hybrid form of business organization"? Be sure to familiarize yourself with the requirements needed to form and organize an LLC. It is important to note that the single member LLC business form is more preferable than a sole proprietorship because it offers the business owner limited liability coverage. Thus, the business owner may not be personally liable for business debt. The business owner also has the option to be taxed either as a corporation or a sole proprietorship. To form a single member LLC, the business owner must file articles of organization with the secretary of state and pay the required filing fee. Lastly, do the exercises at the end of the section.