|
New Mexico and Wyoming offer
the best choices for obtaining an LLC. Here are LLC
basics:
LLC= Taxation As Partnership
+ Limited Liability
LLC
Taxation As Partnership
Partnerships are “pass-through” entities for tax
purposes. This means that partnership income,
deductions and other items passes through the
partnership directly to the partners. Accordingly, each
partner takes into account his or her share of
partnership income, deductions and other items in
determining the partner’s individual tax liability.
|
Partnerships have partners.
|
Limited liability companies (LLC) have members.
The ownership in the LLC is called the “member
interest.” |
If a judgment is awarded against the LLC itself, it may
be levied, and LLC’s property seized or sold in
payment. If, however, a judgment is awarded against a
member, to the extent that the operating agreement so
states, distribution usually cannot be compelled to
satisfy a member’s judgment debt. Creditors have to
satisfy themselves with a “charging
order.”
This gives them the rights to any distributions made by
the LLC to that particular member, but little else.
> LLC's are taxed as a
corporation or as a partnership. Taxation as
a partnership is the default.
The
Limited Liability Of A Corporation
When
a hostile creditor sues the corporation, normally, it
can only take the assets of the corporation. The
stockholders are generally not liable for the debts,
liabilities and acts of the corporation. This is called
“limited liability.” This is very different from a
partnership, where all partners are liable jointly and
severally for everything chargeable to the partnership
|
Corporations have stockholders.
|
Limited liability companies have members.
|
The
LLC has the limited liability of a corporation.
The
Limited Liability Company (LLC) Is A Hybrid Entity
The LLC offers the pass-through taxation of a
partnership and the limited liability of a corporation.
|
CORPORATION |
LIMITED LIABILITY COMPANY |
|
A Corporation can have one or more Directors and
Officers. |
An LLC can have one or more Managers. |
|
The hostile creditor can take your stock, if he
can prove that you own it. |
The hostile creditor can ONLY go after a
member’s economic interest in the LLC through
the courts. This is called obtaining a
“charging order.” |
Once
the charging order is obtained, the hostile creditor is
now first line for any future distributions that are
usually paid out to the member(s).
Wyoming Statute 17‑15‑145. Rights
of creditor.
“…The charging order is the exclusive remedy by
which a judgment creditor of the member or
transferee may satisfy a judgment against the
member's interest in a limited liability company.”
|
