A limited Liability company (LLC) is a flexible form of enterprise that blends elements of partnership and corporate structures. An LLC is similar to a corporation in that it provides limited liability to its owners for the debts and actions of the LLC. Other features of an LLC are more like a partnership, providing management flexibility and the benefit of pass-through taxation.
An LLC is often incorrectly called a “limited liability corporation” (instead of company), when in fact it is a hybrid business entity having certain characteristics of both a corporation and a partnership or sole partnership.
LLCs and Real Estate:
With regard to real estate, LLCs are usually formed by owners of investment/income –producing property to protect them from certain financial risks and provide them with pass-through taxation (see IRS LINK below).
It is important to understand that limited liability does not imply that owners are always fully protected from personal liabilities. Courts can and sometimes will pierce the corporate veil of an LLC when some type of fraud or misrepresentation is involved. Similarly, LLC rules and laws may vary from state to state.
MOST IMPORTANT NOTE:
Client questions regarding LLCs, how to form them, their benefits and/or disadvantages, should always be directed to and answered by a real estate or tax Attorney.