Starting a Business in the Greater Hickory Metro Area of North Carolina

LIMITED LIABILITY COMPANY (LLC)

A limited liability company has a combination of partnership and S corporation characteristics. An LLC has the corporate characteristic of limited liability and the tax advantages and flexibility of partnerships. Under the law, an L LC is considered a separate legal entity and is formed by filing Articles of Organization with the North Carolina Secretary of State. Two or more owners, or “members,” must submit the appropriate paper work. LLCs merit a word of caution to potential business owners. There is a lack of public, judicial, and administrative authority and familiarity regarding the classification and operation of an LLC. An accountant and a lawyer versed in the legalities and organizational structure are recommended.

LLC Advantages

1. LLC is considered a separate legal entity
2. Unlimited number of shareholders unlike the S corporation limit of Subchapter S corporation requirements
3. It must be a domestic corporation
4. It must not have more than 75 shareholders (if stock is purchased jointly, a husband and wife are considered one shareholder)
5. Citizens or resident aliens must own all stock
6. It must have individuals, estates, and certain trusts as shareholders
7. It must have only one class of stock
8. It must have an election with all shareholders present

LLC Disadvantages

1. Significant cost involved
2. Requires time to file appropriate paperwork
3. Legal and accounting assistance recommended
4. Requires at least two members
5. Lack of familiarity by public, professional advisors, judicial, and administrative authorities
6. LLC has a finite existence (30 or fewer years)
7. Congressional investigation could potentially change LLC tax status
8. Lack of legal precedent (i.e., no past history indicating how a court is likely to interpret the law)