This is the second part of a two-part series.  Read Limited Liability Company, Part 1 here.

HE SAYS:

Unless otherwise stated in the Articles of Organization, management of the LLC is vested in its managers as designated by the members; and the managers may, but need not, be members.  The managers of the LLC make decisions by voting at meetings, that must be held at least once a year, after notice or waiver of notice; and, unless otherwise stated in the Articles of Organization, a quorum is established when a majority of the managers are present.

Importantly, and similar to a corporation, the members and managers of a LLC are not liable for any debts, obligations or liabilities of the LLC or of each other, whether arising in tort, contract or otherwise, solely by reason of being a member or manager or participating in the conduct of the business of the LLC.  However, any judgment creditor of a member may seek payment of the debt from the member’s interest in the LLC.

A LLC is dissolved either as called for in the Articles of Organization or upon the consent of a majority of the members.  In the event of a dissolution, the assets of the LLC are first distributed to the creditors of the LLC and then to the members in proportion to their capital contribution to the LLC.

A LLC is of particular benefit to a single member in that, for Federal Income Tax purposes, a single member LLC is treated as if it did not exist.  This means that a Federal ID Number is not required, a Federal Income Tax return for the LLC is not required, and the income from the LLC is passed directly to the member’s individual tax return.

The summaries contained in Part I and Part II are based on the laws of New York State and anyone seeking to start a Limited Liability Company is recommended to first obtain the advice of a knowledgeable attorney and accountant.

WHAT DO YOU SAY?