The purpose of the limited liability company (“LLC”) is to give investors limited liability and, at the same time, special treatment under the federal income tax laws. For Florida state income tax purposes, an LLC is expressly taxable as a “corporation,” unless the LLC is classified as a partnership for federal income tax purposes or qualified to do business in Florida as a foreign LLC, in which case the LLC is exempt from Florida state income tax.
General Characteristic of LLC
The LLC is a hybrid of a corporation and partnership characteristics.
Continuity of Life
The life of an LLC may be perpetual or for a short duration. The period of the LLC’s duration may be stated in the articles or organization. An LLC may also be dissolved by the unanimous written consent of all its members or upon the death, retirement, resignation, expulsion, or bankruptcy or any member.
Transfer-ability of Interest
An LLC member’s interest is considered to be personal property. However, this does not mean that an LLC member’s interest is freely transferable. Pursuant to Fla. Stat. section 608.432, An LLC member’s interest can be assigned in whole or in part. However, such a transfer does not make the assignee (the person given the interest) a member of the LLC.
The assignment only gives the assignee the right to profits or losses that the assignor (person who gave the interest) would have. An assignee can only become a member of the LLC once there is unanimous consent of the other members, unless the articles of the LLC provide otherwise. Upon such consent, the assignee has all of the rights the assignor is the LLC and all of the assignor’s liabilities of which the assignee has knowledge.
Determining how to label your business is critical. The wrong decision could be costly to your business. It is wise to seek the advice of a Business Attorney. An attorney can help distinguish the different business organizations and discuss the consequences and benefits that come with each Contact Wood, after & Wolf, and P.A., to speak with a Business Attorney.