A limited liability corporation (LLC) is a business entity formed under state law. The owners are referred to as "members." There are many benefits of a LLC over a general partnership or corporation. A LLC can engage in any business except the insurance business. Title 4A of the Maryland Corporations and Associations Article provides the establishment of LLCs in the state.
Liability
As the name suggests, a LLC limits liability to the corporation. Members are not personally liable for the obligations of the corporation. When compared to an unincorporated business partnership, which would hold the partners liable for debts and obligations to the partnership, a LLC would be advantageous to insulating the personal wealth of a member.
Lending
Members of a LLC may lend money to the corporation and be treated as ordinary creditors. This permits the members to hold the corporation liable for money that the members have lent to the corporation. Members share in the profits and losses of the business in proportion to their contribution, unless the operating agreement provides otherwise. If the LLC is successful, the members are individually successful as well.
Members
A LLC needs at least one member. There is no limit to the number of members. Someone becomes a member by making a monetary or property contribution to the LLC. If an individual is intending to start his own business and grow the business, a LLC may be a good option because it insulates his personal property if he is sued or if the company goes into bankruptcy.
Management
Unlike an incorporated business that is run by a board of directors, a LLC is managed by the members. This could be good or bad. If there are a lot of members it may be difficult to balance all of the interests. If there are a few members, the members can exert more control over the direction of the LLC. Members may also hire a manager to manage the day to day activities of the LLC.
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