subject: How Are Delaware Llc And Delaware Corporation Entities Different From Each Other? [print this page] It is no secret that the company corporation has been the traditional entity of choice; this is because it has been in existence since time immemorial. For nearly 20 years, the LLC or Limited Liability Company continues to be a well received entity not only in Delaware but in many other parts of the United States.
Fine, who precisely owns each entity? The ownership of a corporation is expressed through the buying of shares. These shares simply represent particular ownership positions in the business; shareholders are even provided certain privileges.
A Delaware LLC deal with ownership of the business rather in a different way as they are a ignored entity for tax purposes and are in fact a limited liability "sole proprietorship" if one owner or a limited liability "partnership" if owned by over 2 or more people. The ownership of a Limited Liability Company is articulated as a percentage of the overall ownership available; which is deemed in so many states as a "Unit Interest". People who own interest in an LLC are simply referred to as "members" and not interest holders. Different from corporations, LLC's can't be traded publicly as there are no shares to exchange.
To a lot of people, the LLC might appear like a really weird business entity. LLC's could be efficiently operated by every member. This is simply called a member managed business. It can even be operated by a single person who is known as the manager. Unlike the company corporation, an LLC doesn't have board members or officers which could be a real pickle when it is the time to sign contracts and so on. On account of this, the state of Delaware and a very great number of states have incorporated legal provision that allow for LLCs to have a President, VP, Treasurer and more.
Finally, a typical Delaware LLC is generally marketed on the claim that members will not have to put up with all the tedious corporate formalities. Well, this is quite true, but not adhering to a lot of the formalities is simply asking for a world of trouble. Everything which is considered significant should be put down in black and white as it will assist to develop a record of what has taken place and what has been taking place in the running of the business. If one ignores doing this and a dispute comes up amongst members, there is completely no real way to know which member is right and which one is wrong. The only method to deal with the dispute is by engaging the services of an attorney, and whoever has the best lawyer wins!
The Limited Liability Company has sure carved out a niche for itself as a really viable business entity in the modern business environment. If you have resolved your mind to establish an LLC in Delaware or in any other state, make sure that you are well aware of how an LLC works and how you could productively run one.
