In a post last month, our blog began discussing how even though many entrepreneurs might think of a limited liability company as being a business formation option reserved for the private practices of accountants, attorneys, doctors and dentists, it’s actually a viable structure for many ventures.
To that end, we examined how LLCs function as a sort of hybrid of general partnerships and corporations in that they provide both pass-through taxation and limited liability. We'll continue our discussion of LLCs in today's post.
In order to form an LLC here in Utah, the involved parties will need to file what is known as a Certificate of Organization with the Division of Corporations and Commercial Code.
This document will need to set forth just some of the following information:
- The name of the LLC, which must also contain the words "limited liability company," "limited company," "LLC" or "LC"
- The street address of the LLC's registered office in Utah
- The purpose(s) behind the LLC's organization
- A statement indicating whether the LLC is to be manager-managed or member-managed, along with names and street addresses of all individuals serving in this capacity
The personnel structure of an LLC can consist of members, managers and employees, with actual management limited to those managers or members specified in the aforementioned Certificate of Organization.
As to the difference between a member and a manager, the former is an owner of the LLC, akin to a stockholder, while the latter is an individual selected by the members to direct the LLC, akin to a corporate director.
It's important to note an additional advantage of organizing as an LLC is that this entity is not bound by many of the operational restrictions covering corporations, such as holding annual meetings.
Furthermore, the restrictions on the types and numbers of shareholders are not as stringent, while LLC members are granted far more latitude when it comes to participating in management decisions than are limited partners.
Here's hoping the foregoing information has proven enlightening. If you have questions or concerns about LLCs or business formation in general, consider speaking with an experienced legal professional.