When forming a business or becoming part of a business in North Carolina, the future business owner has several things to be aware of, especially for limited liability corporations (LLCs). An LLC is one of five recognized types of business; the other four are sole proprietorships, partnerships, corporations, and S corporations. Each has its advantages and disadvantages. An LLC takes the liability away from an individual and places it within the corporation such that the owner’s or member’s assets are protected.
The LLC business structure is regulated on a state-basis and, therefore, regulations for the business owner’s state must be adhered to. A member of an LLC, which is an owner, may include any other party, including other corporations, LLCs, or individuals. There is no federally mandated upper limit to the number of members that can be a part of an LLC, and most states allow an LLC to have a single member.
An LLC, for tax purposes, can be treated as a corporation, partnership, or as part of the owner’s tax return. This is in part defined by how many members there are in the LLC. An LLC that elects to change its tax classification can do so by filing the appropriate paperwork. However, there are time limits and restrictions. For example, if the tax classification has been changed for an LLC, that is the member(s) elect to change the tax classification of the LLC, the tax classification cannot be changed again during the next 60 months.
If an individual is forming an LLC or becoming a member of an LLC, an experienced professional attorney may be able to assist in business documentation and registration. Additionally, the business law associated with forming an LLC can be confusing. A professional and experienced attorney may be able to assist in navigating the registration of and help ensure appropriate lawful operation of the LLC.