About Common Law LLC: Understanding the Basics and Beyond
What is a Common Law LLC?
A Limited Liability Company (LLC) is a popular business structure that offers flexibility and liability protection to its owners. A Common Law LLC, also known as a standard LLC or a single-member LLC, is a type of business structure that combines the pass-through taxation of a partnership or sole proprietorship with the limited liability of a corporation.Key Characteristics of Common Law LLCs
- Pass-through taxation: LLCs are pass-through entities, meaning that business income is only taxed at the owner-level, and not at the business-level.
- Limited liability: LLC owners have limited personal liability for business debts and obligations.
- Flexibility in management: LLCs can be managed by their owners (member-managed) or by a hired professional manager (manager-managed).
- No requirement for a board of directors: LLCs do not need to have a board of directors, unlike corporations.
- Operating agreement: LLCs require an operating agreement, which outlines the ownership, management, and operating structure of the business.
Choosing the Right Business Structure: Common Law LLC vs. Other Options
