Louisiana residents who are thinking about launching a new venture have several options when it comes to choosing the form of legal entity that the business will operate under. They include sole proprietorships, partnerships, and corporations, but limited liability companies have become increasingly popular in the last several years.
As the name implies, the assets of the owner or owners of a limited liability company will generally not be exposed to lawsuits against the business or to the company’s creditors. Limited liability companies are governed by state law, and the owners, referred to as “members”, can be corporations or other LLCs in addition to individuals. An LLC is allowed to have only one owner, and there is no limit as to the number of members it can have.
The federal income tax treatment of a limited liability company is fairly complex, and it depends on what the members choose. It can be treated as a partnership or a corporation, or it can become part of an owner’s tax return, similar in some ways to a Subchapter S corporation. If there is more than one member, the Internal Revenue Service will deem the LLC to be a partnership for tax purposes unless a Form 8832 is filed and the owners elect to be treated as a corporation. There are rules relating to when an election can be filed and to when it can come into effect.
Regardless of the legal form that a new venture is operating under, it will generally be subject to the same local, state and federal statutes and regulations. An experienced business law attorney might provide advice and counsel to entrepreneurs on these and other business formation matters.