Question:

What exactly is meant by Limited Liability Corporation?

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And why do they operate out of Delaware?

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  1. It is just another form of a corporation and it is used as a "shell" to protect the owners and employees from litigation.  For example if you have a company that is not incorporated and you are the sole owner, and your customer gets hurt on your premises, if they can prove neglect or some fault by you, not only can they sue the company, but also go after your personal assets, home, savings, cars etc.  If that same situation happens to a corporation, they can only go after the corporation itself.  None of the principals or employees.  

    Why delaware?  Better taxes and laws to protect the corporation I suppose.


  2. Grrr!

    An LLC is not a corporation.  LLC stands for Limited Liability COMPANY.

    The purpose of the LLC form of business entity is to provide sole proprietorships and partnerships with a legal shield from some types of liability.

    Be aware of the fact that the shield isn't all that good.  If you plan on forming an LLC make sure that you have plenty of liability insurance or you may be in for a nasty shock.

    Delaware is a preferred state for two reasons:

    1  Because taxes are relatively low

    2  Because businesses must be sued in a state in which they operate and Delaware Chancery Courts tend to be quite friendly to business.

    Hope this helps

    Jerry-the-bookkeeper


  3. Limited liability means if someone would get hurt and sue for 1 million dollars then the company can just say they can only afford 100,000 dollars and that would be all they would have to pay.

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