Chapter 38: Limited Liability Companies (LLCs)

Flashcards covering key terms and concepts from Chapter 38 on Limited Liability Companies.

Limited Liability Company (LLC)

A hybrid form of business enterprise that offers the limited liability of a corporation with the taxation benefits of a partnership.

Members

Owners of an LLC who have an ownership interest and are protected from personal liability.

Piercing the LLC Veil

A legal action that allows creditors to go after a member's personal assets if the LLC is treated as a sham or improperly managed.

Articles of Organization

The document filed with the Secretary of State to create an LLC, containing essential information about the business.

Operating Agreement

An internal document that outlines how an LLC will be managed and operated, detailing membership rights and responsibilities.

Dissociation

The process by which a member of an LLC removes themselves from participation in the LLC.

Winding Up

The process of liquidating assets and settling debts when an LLC is dissolved.

Cooperative

An association of individuals pooling resources to gain advantages in the marketplace, often structured as an LLC.

Joint Venture

A temporary partnership for a specific project or transaction, treated like a partnership for legal and tax purposes.

Fiduciary Duty

The obligation of a manager in a manager-managed LLC to act in the best interest of the LLC and its members.

Default Taxation

Unless an LLC elects otherwise, it is taxed as a partnership by default under IRS rules.

Foreign LLC

An LLC that is formed in one state but conducts business in another state.