Limited Liability Company (LLC) Structure

• 1. Articles of Association

  The document that formally creates an LLC is its article of association. An LLC comes into existence when its articles or organisation are filed with the state LLC filing office. The articles usually contain fundamental structural information about the company, like:

  • The name of the LLC
  • The name of at least one Director
  • Whether the LLC is managed by all its members or by specially selected directors.
  • The names and addresses of its members and/or members and its registered agent.
  • The agent’s office address or the registered office of the LLC where all office documentation can send legal papers to the LLC.

• 2. Operating Agreement

  The operating agreement is an LLC’s second most important document. You don’t have to file the operating agreement with the government; it’s an internal document, just like corporate by laws or a limited liability partnership agreement.

  The operating agreement lists the capital, profits and voting interests of current LLC members, and may include other operating rules for your business. For example, the operating agreement may specify how often regular meetings of directors and members will be held and the call, notice, quorum and voting rules for each type of meeting. Or it may not deal with these issues, leaving these details to the LLC directors and members to decide later. Typically, the operating agreement also includes rule and procedures for approving special matters, such as directors and member voting requirements for admitting new members or for approving the sale of a membership interest.

• 3. Memorandum of Association

  Your LLC is not legally required to issues membership certificates to members. However, some LLC owners like this additional formality.

  If you wish to issue certificates, there is not required format. Most certificates include the name of the LLC, the names of the member, and the date the certificate was issues. Certificates are signed by one or more LLC officers. A certificate usually does not show the exact capital, profits or voting interest of the member; instead, it simply recites that the member is entitled to the rights and subject to the responsibilities of membership, as set out in the articles of organisation and operating agreement of the LLC. After the certificate is issues to a member, the LLC’s secretary should fill out the certificate stub, listing the certificate number and date it was issued. These stubs should be kept in the LLC records folder. The stubs usually include a transfer section, to be filled in if the member transfers the membership back to the LLC or to another person.

• 4. Membership Register

  It is mandated by law that all LLCs keep an alphabetical list of the names of addresses of all current members. This list should be available for inspection by members during regular business hours of the LLC. It should also be made available to all members at any membership meeting. The LLC secretary will use this list to prepare and mail notice of meetings to members. If the LLC is managed by specially selected directors, the LLC should also have a separate list of the directors’ names and addresses.

• 5. Membership Transfer Ledger

  You should keep a record of the date and details of any transfers of membership in your LLC. Typically, a membership transfer ledger shows.

  • The name of the transferring members
  • The date of the transfer of membership
  • The name of the transferee

  If the transferring member was originally issues a membership certificate, the certificate should be returned to the LLC, marked “cancelled” by the LL secretary and attached to the transfer ledger. If your LLC issues membership certificates with stubs that contain a transfer section for supplying transfer information, the retained certificate stubs can serve as your membership transfer ledger.

Limited Liability

The biggest benefit of a limited liability company is the limited economic liability that business owner and shareholders must bear. If the company ever goes through monetary troubles, apart from actual value of their shareholding, the assets and personal finances of shareholders remain intact. Which means that if a company ever faces bankruptcy; the business owners are liable to owe a minimal value of their overall stake in the company. In some cases, this could be as little as £1.

Tax Cuts

There are more opportunities and great flexibility for taxes on profits and on personal income in the case of limited liability companies. Before 1 April 2015, LLCs had two Corporation tax rates;

• If their profits were £300,000 or above, then the corporation tax applicable was 20%.
• If the profits were £1,500,000 then the corporation tax applicable was 21%.

However, after revisions to this tax code on 1 April 2015, the tax rates have been brought down to 20%, regardless of the size of profit.

In addition, according to corporate tax laws, directors can keep their income level below the higher taxable level by taking remuneration in combination of dividends and salary. As a result, more money is available for reinvestment or distribution among the shareholders and directors.

Professional Status

A professional and corporate image is created by a limited company, thus boosting the value of business. The LLC generally follow a standard structure that the international business community is familiar with. This organisational structure is one that the international business community trusts. For instance, the structure includes the board of directors, secretaries and shareholders who manage the day-to-day operations of the company.

Final Words

Operating an LLC without a doubt has certain disadvantages; considering the higher administration costs and accounting requirements, in addition to more attention and time that needs to be put in. Nevertheless, the professional and financial gains that outcome in the long run, outweigh these negatives.