Connecticut Limited Liability Company-A Simpler Business Structure

Easy Accessibility Of Capital For LLC

September 5, 2004
By Akhilesh Goenka

There is a bigger supply of capital accessible to a Connecticut Limited Liability Company as compared to partnerships or sole proprietorships. A lot of sole-proprietorships or partnership businesses are sold for one to two times the annual earnings. Whereas in the case of companies the valuation is somewhere in the region of 12 to 25 times the annual earnings or more.

Since the company and the owner are two distinct legal entities, lawsuits filed against the company do not affect the owner personally. When the Limited Liability Company borrows money, there are various measures to safeguard the members personally liable to repay the debt. The life of a limited liability company is limited upon the death, withdrawal or bankruptcy of a member (owner).

The Limited Liability Companies have members and, if preferred, managers. They also have the discretion of opting for officers and directors. One person has the authority to hold almost all positions in most states. A LLC may also hold meetings of annual members and managers. The personal and company funds must not be mingled in the same account since they are distinct legal entities.

This type of a business structure has abundant communal features of both corporations as well as partnerships. The owners of such business structures are called members and not partners or shareholders, as is the case with others. There is no requisite to the number of members and they may include individuals as well as corporations.

It is always recommended to hunt for tax and legal counseling to determine the best business structure the person should opt for. This is not the single factor to be taken into consideration as it also depends on the individual’s competence to accept risk. Hence it is always better to make a practicability report before hand and weigh its pros and cons rather than making a hurried decision.

The entire procedure of bringing a limited liability company into being is quite multifaceted but simpler when compared to a corporation. For setting up a company with limited liability, one has to file articles of organization with the Secretary of State and pay the required fees. These can be prepared by hiring a lawyer or the individual himself.