Limited Liability Entities

A single member LLC files as a disregarded entity on a Schedule C. It does not file as a Form 1065 Partnership tax return.

No. There is no limit on the number of owners (members) for a LLC or a Limited partnership or a C Corporation. There are limits for S Corporations and Sole Proprietorships.

No. There are no citizen requirements for LLC's, Limited partnerships, Sole Proprietorships or S Corporations. There are citizen requirements for S Corporations.

Yes. LLC's have similar liability limits as do C or S Corporations. Sole Proprietorships and Limited Partnerships are personally liable for business liabilities.

Yes, An LLC and a C Corporation may be owned by another business instead of individuals. S Corporations, Limited parnerships and Sole Proprietorships cannot be owned by other businesses.

Some advantages are that it avoids certain S corporation restrictions. It also avoids double taxation of profits.
Some disadvantages are that it is currently considered a relatively new business entity with little case law or regulatory law currently available.
There is inconsistent treatment from state to state. The entity must have at least 2 owners.
Speak to your local CPA about determining the best entity choice to fit your needs

A limited liability company, like a corporation, is set up and created under state law. Its owners are referred to as members. The entity gives its members the best of both worlds - Corporate liability protection with the advantages of partnership taxation. Forming a limited liability company is more expensive than forming a corporation and may not be necessary for your situation. Speak to your local CPA in detail to determine if forming or changing your entity status to a limited liability company is the correct choice for you.

Both entities provide the benefits of pass-through taxation to avoid double taxation of profits as well as limited liability for the owners. S Corporations pass-through income to the shareholders who pay no Self Employment tax on that income, While LLC income is subject to self employment tax. S corporations have restrictions which are not applied to limited liability companies. Limited liabilty companies cannot issue stock, but rather, they offer memberships. S corporations, issue stock and are owned by the shareholders. S corporations are managed by the directors and officers, while limited liability companies are managed directly by the members unless they hire managers.