Limited Liability Company Structure.
A limited liability company's internal structure is extremely flexible. A limited liability company always has members, and can have managers and officers.
Members are the owners of the limited liability company. In a "member managed" limited liability company, the members play the combined role of the shareholders, directors and officers of a corporation. They make all the major decisions, and handle all the day to day operations of the company.
Managers. For limited liability companies that have managers, the managers play the same roles as the directors and officers of a corporation. Limited liability companies that have managers are called "manager managed". The managers are elected by the members. The managers will make all the major decisions, and handle the day to day operations.
Officers. Limited liability companies can also have officers. The members and managers can decide whether there will be officers, and the roles of officers. Unlike corporations, there do not have to be a president, secretary or treasure.
Corporate meetings. Unlike corporations, limited liability companies do not have to have annual meetings of the members. Generally, the operating agreement of the limited liability company will establish how meetings will be conducted. Meetings can be conducted in person or by conference call, or a combination of both.
Corporate formalities. A limited liability company does not have to file annual reports. Rather, it only has to pay the annual filing fee. It does not have to disclose the owners, members or directors publically, whereas a corporation has to file an annual report that discloses the officers and directors of the corporation.
Compensation. A limited liability company will generally make distributions to its owners. Unless has elected to be an S corporation, it cannot pay the owners salaries, but can pay "guaranteed draws" that are the functional equivalent of salaries.
Tax status. A limited liability company as several options as to how to be taxed.
a. Disregarded entity. A limited liability company that has one owner can elect be taxed as a disregarded entity. This means that the owner is treated as a "sole proprietor". The owner will report the revenue and expenses on the owner's personal tax return, usually on a Schedule C.
b. Partnership. A limited liability company that has two or more owners can elect o be taxed as a partnership. All profits and losses are allocated to the owners based upon their respective ownership. All profit is distributed, and the owners will pay estimated taxes four (4) times a year.
c. C or S corporation. A limited liability company can elect to taxed as either a C corporation or an S corporation.
d. You should consult with your accountant to determine what tax status is the best for your stuation.
