Nature of limited liability companies

Introduction to limited liability companies (LLCs)

A limited liability company (LLC) is a business organization with a liability shield advantage to the partners and shareholders. Several states permit the formation of a LLC. This business organization arose from the traditional partnership, where past business owners desired to adopt and operate a business structure.

The main aim of forming a LLC is to distribute their income to the partners, as well as permit the shareholders and directors of the company. This to protect business owners from personal liabilities if the business makes a loss. If the business operates in a loss, the business owners establish a separate independent corporation that assumes the entire liability of the incurred loss or debts of the company.

FinReg business tip

As a business owner, a limited liability company structure would mean you will not be personally liable for the actions of your company, nor will your personal assets be at risk to creditors.