Talk:Limited liability company

Archives (Index)

2011 2013 2017 2019 2020 2021

This page is archived by ClueBot III.

Wiki Education Foundation-supported course assignment

This article was the subject of a Wiki Education Foundation-supported course assignment, between 19 October 2020 and 18 December 2020. Further details are available on the course page. Student editor(s): Dgansman.

Above undated message substituted from Template:Dashboard.wikiedu.org assignment by PrimeBOT (talk) 02:36, 17 January 2022 (UTC)

Limited liability and taxation

I think the article would benefit from a discussion of the policy reasons behind corporate taxation and whether limited liability without corporate income taxation is problematic. — Preceding unsigned comment added by Bookish982 (talk • contribs) 23:53, 3 November 2020 (UTC)

If you are referring to U.S. LLCs, that is because it is internally structured and governed like a partnership with limited liability, even if it only has one partner. For both LLCs and partnerships, the tax burden is passed onto its members (owners). So income taxes on LLCs are still paid, the only difference is who is paying the taxes. It should be noted that in the U.S., an LLC can elect to be treated as a corporation for tax purposes, but all that really does is shift the tax burden to the LLC instead of it being on the LLC's owners. Basically, it just changes who files the tax return. So the government gets their share of the money regardless. For smaller LLCs and for LLCs that are subsidiaries, it is often easier for the owners of the LLC to file. For larger LLCs that are not subsidiaries and have multiple members, the LLC may take on the burden of filing the taxes to make it easier for its members. That way an LLC can grow without having to change entity type. So the policy reason is that the government gets the money regardless, but they are flexible on how you file your taxes. TejanAusland (talk) 20:41, 14 July 2023 (UTC)

Confusion/conflation of tax residence and citizenship

This statement

In the United States, an S corporation has a limited number of stockholders, and all of them must be U.S. tax residents; an LLC may have an unlimited number of members, and there is no citizenship restriction.

needs editing for clarification by someone knowledgeable. Tax residence and citizenship are not equivalent. Barefoot through the chollas (talk) 15:38, 3 August 2021 (UTC)

I have added information about U.S. tax residency to the article. ~ Quacks Like a Duck (talk) 22:08, 30 December 2021 (UTC)

Management of an LLC?

I am missing topics about the management of LLCs, terms like "governor" or "board of governors". The disambiguation page about the term "Governor" does not even contain a link to the LLC page. Unfortunately I don't know enough about that topic to add this information myself... FBitterlich (talk) 10:25, 25 July 2022 (UTC)

For a U.S. Limited Liability Company (LLC), it is internally governed like a partnership in the case of a multi-member LLC. It does not issue stock and its members own percentages of the company as specified in its Operating Agreement. This is similar to how a U.K. Limited Liability Partnership (LLP) is governed. For a single-member LLC, it is still structured like a partnership, except it is a partnership with one partner.

U.S. LLCs are managed by one or more Managers appointed by its Members. Owners of the company are Members. The LLC is governed according to the rules specified in the Operating Agreement.

U.S. LLCs do not have shareholders, do not issue stock, do not have directors, do not have a board of directors, do not have governors, and do not have a board of governors.

Unlike a corporation or private limited company, a U.S. LLC has no layer between the owners (Members) and the management (Managers), unless it wants to add one in the Operating Agreement. It works similar to a partnership in this regard.

For a U.K. Limited Company (Ltd.), often casually referred to as a limited liability company (lowercase), it is structured similar to a U.S. Corporation, with shareholders which elect a Board of Directors which elects or appoints officers to run the company.

U.S. LLCs are basically partnerships with limited liability, while U.K. Limited Companies are private limited companies (corporations with limited liability). TejanAusland (talk) 20:05, 14 July 2023 (UTC)

Type of limited liability company

[1] Public limited companies. [2] Private limited companies 105.112.182.66 (talk) 21:02, 26 February 2023 (UTC)

There are also U.S. style Limited Liability Companies (LLCs) which are structured similar to a Limited Liability Partnership (LLP), except that an LLC can have one member, whereas an LLP requires two. A U.S. style LLC is not the same as a private limited company or a public limited company. So there are actually three types. TejanAusland (talk) 08:08, 12 September 2023 (UTC)

U.S. LLC is not similar to a U.K. Private Limited Company

There is a lot of confusion and misinformation around this topic since both a U.K. Limited Company (Ltd.) and a U.S. Limited Liability Company (LLC) are often casually referred to as "limited liability companies" (lowercase). But they are not actually the same thing. A U.S. LLC is actually closer in structure to a U.K. Limited Liability Partnership (LLP) than it is to a U.K. Private Limited Company (Ltd.). A U.K. Private Limited Company (Ltd.) is closer to a U.S. Corporation (Inc., Corp., Ltd.) than it is to a U.S. LLC.

The reason why I say this is because a U.S. multi-member LLC is structured like a partnership, and a single member LLC is structured like a sole proprietorship (or more accurately, a partnership with one partner). This is radically different than a corporation or private limited company which requires shareholders, a board of directors, etc. A U.S. LLC has none of that.

So to claim that a U.S. LLC that is internally structured like a partnership is the same thing as a private limited company that has shareholders and a board of directors is misleading a best and inaccurate at most.

If you want to verify if this is true, compare the structure of a U.S. LLC with a U.K. LLP, and compare the structure of a U.S. corporation with a U.K. Private Limited Company, and you will see the disparity. TejanAusland (talk) 19:38, 14 July 2023 (UTC)