There has been a great deal of discussion in the media about why Mark Zuckerberg has chosen an LLC, or Limited Liability Company, for his new charity rather than a more traditional non-profit organization. Here at Bergmann & Good, we are big fans of the LLC because of the benefits and the freedoms it can offer. An LLC offers Zuckerberg and his wife, Priscilla Chan, a great deal of control over their money and how it will be used. As NPR reports, non-profits have limitations on their role in government lobbying and specific rules and regulations they have to follow to keep their status as a non-profit organization. An LLC has none of those restrictions. However, billionaires are not the only ones who can take advantage of the many used of the LLC. Whether you have 45 billion dollars or a small business you run from your home office, an LLC can help you.
LLC’s are easy to set up and relatively inexpensive. They also create a boundary between assets related to the business and personal assets. For instance, if you have a small business and you are sued, most likely the assets involved in the lawsuit will be those of the LLC rather than all of your personal assets that never had any involvement in the business. Although you still have financial responsibility for your business, there are a number of situations where having an LLC in place creates a legal divide between business and private assets.
LLC also offers you freedom over your business. How it is set up, run, dissolved and managed are all up to you. You can also set up an LLC to be established and dissolved on specific days, meaning you can create an LLC for temporary use and dissolve it easily. The management of the LLC and how it can be changed are all part of the Operating agreement which you write at the formation of the LLC.
Compared to corporations and non-profit organizations, LLC have more easily navigable tax requirements and more flexibility. Corporations are more protective because they mean that the business rather than the shareholders themselves are legally responsible for debts it incurs, but depending on what kind of company or organization you wish to create, an LLC may be an easier route.
Give Bergmann & Good a call if you think that an LLC could be of use to you or your business, even if you are looking to raise charitable donations rather than funds for your kid’s college education. We can help you through every step of the process- you don’t need to be Zuckerberg to make use of the Limited Liability Company!
For further information about Zuckerberg and Chan’s new LLC: http://www.npr.org/2015/12/03/458276386/facebook-founder-to-give-away-his-fortune-through-for-profit-company