LLC Full Form

LLC full form is Limited Liability Company. The term represents a flexible form of enterprise that blends the elements of corporate and partnership attributes into one institution. LLC also provides limited liability from its actions for owners. The LLC is an example of a business structure that has gained huge popularity globally. In India, the LLCs are recognized as Limited Liability Partnerships (LLP) and Public or Private Limited Companies.

What is the Full Form of LLC?

As mentioned above the full form of LLC is a Limited Liability Company. It is a business structure that is based in the US and is responsible for protecting its owners from personal responsibility for their debts or liabilities. The companies related to LLCs are the type of hybrid entities that provide corporations with partnerships or sole proprietorships. In simple words, the term LLC is defined as a legal institution where the investor or owners are protected against the business debts as LLCs are treated as separate organizations or institutions.

History of LLC

The LLC, full form of which is Limited Liability Company is a relatively new type of business entity, with its origins dating back to the 1970s. The first state to enact a law authorizing the creation of LLCs was Wyoming in 1977. Hamilton Brothers Oil Company was the holder of the project for the law, that sought to organize its business in the United States with tax advantages and liability similar to those it had obtained in Panama. From 1960 to 1997, the classification of corporations not included in US federal income tax laws was governed by the Kintner Statutes, named after the president's tax in 1954.

Evolution of LLC

Although LLC’s requirements depend on the state. But the first task for the owners is to shortlist and select a name. Articles by institutions can be documented and filed with the help of state involvement. These articles help in establishing powers, rights, duties, liabilities & other obligations of members included in LLC. Other information also includes the name and address of LLC members, LLC registered agent name, and business SOP. Institutions articles are filed including fee payment which is done directly to the state.

Different Forms of LLC’s in India 

1. Limited Liability Partnership

The LLP, full form of which is Limited Liability Company, includes features that include both partnership and company. According to the rules, two partners can also register for LLP. An important feature of LLP is the liability of partners is limited to the extent for their contribution in partnership. 

2. Private Limited Company 

All business entities are covered by the provisions under the Companies Act 2013 and are privately held and not freely available to the public. While a PLC can have a maximum of 50 shareholders, a joint stock company must have at least 2 members.

3. Public Limited Company 

It is also a type of entity that is covered under Companies Act 2013 whose shares are held by the public. The shares can be also used for trading on stock exchanges. The public limited company can be only formed with a minimum of 7 shareholders.

Advantages of LLC

Below mentioned are the advantages of LLC

• Limited Liability: The owners of an LLC are not personally liable for the liabilities and debts of the business. That means, if the LLC goes bankrupt or is sued, the owner's personal assets are not at risk.
• Taxation: The owners pass the profits and losses of LCC which are reported by them on their personal tax returns. This means that the LLC does not pay taxes on its profits, which can save the owners money.
• Flexibility: LLCs offer a great deal of flexibility in terms of management, taxation, and ownership structure. For example, LLCs can be managed by their members or by managers who are not members. They can also be taxed as a partnership, a corporation, or a hybrid of the two.
• Credibility: LLCs are a well-established business structure that is recognized by businesses and investors. This can make it easier to get loans or other financing for your business.
• Privacy: The names of the owners of an LLC are not publicly available in most states. This helps to protect the privacy of the owners.

Disadvantages of LLC

Below listed are the disadvantages of Limited Liability Company (LLC full form)

• Includes complex legal operations: The law governing an LLC institution’s legal procedure is complex and also varies from state to state
• Double Tax: The profits made by LLC may require to pay double tax in some cases. This can only happen if the LLC is taxed as a corporation and the owners then pay taxes on the dividends they receive from the corporation.
• High Cost: The cost of forming and maintaining an LLC can be more than the cost of forming other types of business entities, such as a sole proprietorship or a partnership. 
• Difficulty in transferring interest: The interests in an LLC can be difficult to transfer, especially if the LLC has been in existence for a long time or if there are multiple owners.

 Important Facts about LLC

• LLC is a corporate structure that helps in protecting owners from personal liquidation of companies debt or liability.
• LLC regulations vary from state to state. 
• Any institution or organization can be a member of an LLC with notable exceptions from banks and insurance companies.
• Limited Liability Company (LLC full form) don't require to pay taxes on their profits directly.

Written By: Deepit Mathur