California Limited Liability Company-An Amalgamation

Members Are The Actual Bosses

September 4, 2004
By Akhilesh Goenka

The California Limited Liability Company is neither a partnership nor a corporation. A Limited Liability Company is a different sort of business that offers an alternative to partnerships and corporations, by mingling the corporate advantages of limited liability with the partnership advantage of pass-through taxation.

This breed of business arrangement enjoys the benefit of being an amalgam between a partnership and a corporation. The gain of a Limited Liability Company is that the majority of the states require fewer formalities to be adhered to in an LLC in contrast to a corporation. It is the Limited Liability Company, which is answerable for the company's debts thus defending the members from individual liability.

Nonetheless, there are some exceptions to this rule wherein the individual members may be held legally responsible. In the case where an LLC member has personally assured the obligations of the LLC, he will be held liable in the eyes if law. For example, if the Limited Liability Company is reasonably new and has no past credit rating, a prospective landlord about to lease office space to the LLC will most likely require a personal guarantee from the members.

A Limited Liability Company is owned by its members. They are equivalent to partners in a partnership or shareholders in a corporation. A member will resemble shareholders if the LLC utilizes a manager or managers, because then the members will not participate in management. If the LLC does not utilize managers, then the members will closely resemble partners because they will have a direct say in the decision making of the company.

The management and control of the company lies in the hands of its members unless the articles of organization state otherwise. The articles of organization have got to state the date on which the Limited Liability Company's continuation will conclude. Usually the voting interest in the company corresponds to significance in profits, unless the operating agreement provide otherwise.