Entity Selection/Introduction to LLCs

This is the first in a series of three lessons on limited liability companies. It provides a comparative overview of unincorporated entities such as sole proprietorships, partnerships, and limited liability companies (LLCs), and incorporated entities including S and C corporations. LLCs are often considered a hybrid between partnerships and corporations, and therefore it is important to have a basic understanding of those business entities first before learning about LLCs, especially because many clients confuse LLCs and S corporations.In this lesson you will play the role of an attorney advising potential clients on different entity types based on risks, tax considerations, exit strategies, need for control, and other factors.

If you are not interested in learning more about LLCs, and only want to know the basic differences between unincorporated and incorporated entities, you do not need to continue to the other two lessons on LLCs because this lesson is a stand alone course.

However, if you are interested in learning more about the formation of LLCs, rights of LLCs members, and how LLCs terminate, then you should continue to the subsequent lessons after completing this one.

Learning Outcomes

On completion of the lesson, the student will be able to:

1. Discuss some issues to consider when forming an entity, such as ease of formation, operation and control, tax issues and more.
2. Analyze these issues when forming a sole proprietorship, general or limited partnership, corporation, and limited liability company.
3. Explain how a limited liability entity provides the flexibility and liability protection of a corporation without as many formalities.