What Are The Characteristics of a Limited Liability Company


There are various legal structures of a business that you can have. One of these is Limited Liability Company or LLC, which many entrepreneurs consider worth taking.

But, do you know what makes an LLC the best option for a business structure? Find out below the various characteristics of an LLC and see if it is ideal for you.

What is an LLC?

Limited Liability Company is a business structure where the business owners, also known as members, can enjoy personal liability protection.

It means that their individual assets won’t be used in recovering their business in case of any losses. Typically, an LLC is handled by the state and follows specific rules too.

Moreover, an LLC registration requires filing an Articles of Organizations, which has a fee. Fees vary from one state to another. For instance, Washington LLC cost $180 to $200, depending on how you will file it, either via mail or online.

LLC’s Attributes

What Are the Characteristics of a Limited Liability Company

LLC, as a business structure, has various characteristics that make it stand out among all systems. To give you an idea of what makes an LLC an ideal business structure, here are the following :

1. Limited liability

Limited liability protection is the main advantage of an LLC. Typically, on other business systems, each member is always responsible for other team members, which is quite tricky to handle.

On LLC, the only thing you hold responsible for are your actions, and in case of any losses on your business, all your personal assets such as car and house won’t be at risk.

2. Separate legal identity

Given the fact that LLC offers limited liability protection, it also means that it operates as a separate legal entity from the members.

However, it can still enter contract agreements and transact business using its own name. If there is an unincorporated partnership, members incur such debt as a group, and it can still continue even if some members decided to withdraw.

3. Flexible taxation

An LLC business structure gives you the freedom on how you want to be taxed. But the first thing you need to do is to file LLC taxes. You can declare it as a single-member company or multi-member LLC.

Likewise, you can also file and have it either an S-Corporation or a C-Corporation. Your taxes will be incurred rightly given the fact that the IRS doesn’t see LLC as a separate tax entity.

4. Simple Formation and operation

You can enjoy the simplicity of an LLC when it comes to forming and running the company. Filing documents needed is simple as well. Aside from the articles of organization, you need to file an agreement defining ownership and the duties and responsibilities of the individuals constituting the company.  

There are states that annual meeting and minutes of the meeting is not necessarily required, which provides convenience on the part of the members.

Likewise, not unlike a corporation that should have a strict record-keeping system, simple record keeping will do under the LLC system.

Furthermore, a limited liability company can hire a virtual business address service to streamline their business mail. It provides a physical mailing address and mailbox for businesses without a physical office space. It’s convenient for LLCs because it ensures all mail is safe and secure.  

With a virtual address for LLC, the mail will be sent to the remote mail facility and uploaded for online viewing and management. Consequently, the LLC can keep its essential mail/correspondence organized, making the process seamless.  

5. Control

Unlike in a corporation, you can become the only owner with complete business control. If there are several owners, all of you can define and structure the management in any way you want under the operating agreement.  

Another good thing about forming an LLC is that you’re not accountable to the board of directors or anyone else. In other words, you have more freedom to make critical business decisions.

6. Flexible Profit Sharing

Different business structures have varied profit-sharing requirements. The corporation pays dividends according to the ownership percentage of every shareholder. In a partnership, the profits are divided among the partners equally.  

On the other hand, with a limited liability company, the owner/owners can provide a profit-sharing plan in the operating agreement. For example, one owner can receive greater profits while the others take less. This may be done when one owner has more responsibilities in the business operations than the others. 


If you look closely enough, a Limited Liability Company has more favorable attributes when holding responsibilities than any other business structure.

Liability protection is one of the winning features of this system. This is the reason why entrepreneurs prefer using LLC in their business, especially startups. Besides, everyone wants their personal assets to be safe and separated from their business after all.

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Author: Joyce Velosco