Delaware LLC

[Kuriousity]

Okay boys---I know there has to be at least ONE accountant in this bunch...so here goes....

 

I need to know what a "Delaware-registered single member LLC" is & what it is primarily used for.....and useful input is deeply appreciated....

[Kuriousity]

Also, if I am seeing two LLCs with the same name, but one is called "LLC" & the second is called "Managing Member Corporation", what am I not seeing that explains the difference?

[seaboy4hire]

Might be a question for a lawyer as well whos well versed in this as well.

 

Hugs,

Greg

[Kuriousity]

True....and I know there has to be at least one of those in this bunch as well.....

[+ quoththeraven]

All it means is it's a single-member limited liability company organized under the laws of the state of Delaware. LLCs are passthrough entities for tax purposes, as are Subchapter S corporations, partnerships, limited partnerships, and limited liability partnerships. LLCs are simply a way to organize a business; it's not determinative of what kind of business it is other than it's possible that certain professionals such as doctors, lawyers, and accountants can't organize as LLCs because they can't avoid personal liability for malpractice. They can, however, organize using LLPs.

 

The real bottom line is that passthrough entities are not subject to double taxation, whereas Subchapter C corporations (these are subchapters of the Internal Revenue Code) are, but like all of the above other than general partnerships (or sole proprietorships, also passthrough entities), they are theoretically eternal in nature (partnerships end automatically when a partner dies; sole proprietorships end when the sole proprietor dies) and if properly run, their liabilities do not become liabilities of the individual owners (or in LLC-speak, members).

 

An LLC can have one or more members (think owners/board of directors who set company policy): in this case, there is only one member, and it's a corporation, although that doesn't disclose or determine whether it's a C corporation or an S corporation.

 

Why Delaware? I dunno. I know that Delaware is viewed as having business-friendly and flexible laws governing corporations. Perhaps the same is also true of LLCs. Or maybe Delaware's reputation for one carries over to the other unjustifiably. I don't remember whether any of the LLCs I ran across is my practice were organized in Delaware. I think most of them were organized pursuant to the law of the state in which the business was located.

[Kuriousity]

All it means is it's a single-member limited liability company organized under the laws of the state of Delaware. LLCs are passthrough entities for tax purposes, as are Subchapter S corporations, partnerships, limited partnerships, and limited liability partnerships. LLCs are simply a way to organize a business; it's not determinative of what kind of business it is other than it's possible that certain professionals such as doctors, lawyers, and accountants can't organize as LLCs because they can't avoid personal liability for malpractice. They can, however, organize using LLPs.

 

The real bottom line is that passthrough entities are not subject to double taxation, whereas Subchapter C corporations (these are subchapters of the Internal Revenue Code) are, but like all of the above other than general partnerships (or sole proprietorships, also passthrough entities), they are theoretically eternal in nature (partnerships end automatically when a partner dies; sole proprietorships end when the sole proprietor dies) and if properly run, their liabilities do not become liabilities of the individual owners (or in LLC-speak, members).

 

An LLC can have one or more members (think owners/board of directors who set company policy): in this case, there is only one member, and it's a corporation, although that doesn't disclose or determine whether it's a C corporation or an S corporation.

 

Why Delaware? I dunno. I know that Delaware is viewed as having business-friendly and flexible laws governing corporations. Perhaps the same is also true of LLCs. Or maybe Delaware's reputation for one carries over to the other unjustifiably. I don't remember whether any of the LLCs I ran across is my practice were organized in Delaware. I think most of them were organized pursuant to the law of the state in which the business was located.

 

Brings up a question for me---if it is registered in Delaware but listed as a New York entity, is that legal or is something "off"?

[+ quoththeraven]

Brings up a question for me---if it is registered in Delaware but listed as a New York entity, is that legal or is something "off"?

 

It's completely legit. To me, that means it's located in New York but it's organized under the laws of Delaware. If the scuttlebutt is to be believed, most of the Fortune 500 are organized under Delaware law, but very few of them (maybe only DuPont, assuming it's still large enough to be in the Fortune 500) are actually located there.

[Kuriousity]

It's completely legit. To me, that means it's located in New York but it's organized under the laws of Delaware. If the scuttlebutt is to be believed, most of the Fortune 500 are organized under Delaware law, but very few of them (maybe only DuPont, assuming it's still large enough to be in the Fortune 500) are actually located there.

 

Okay. This disclosure form I am looking at had several Delaware based LLCs on it, but were listed as entities in New York state.

 

Side question--some of them have the same name as a listed LLC, but instead they are called "managing member corporation"....what do they do?

[Kuriousity]

I'm having a hot Saturday night...reading a financial disclosure form and 990-PF forms......

[+ quoththeraven]

Okay. This disclosure form I am looking at had several Delaware based LLCs on it, but were listed as entities in New York state.

 

Side question--some of them have the same name as a listed LLC, but instead they are called "managing member corporation"....what do they do?

 

The managing member corporations are corporations (like I said, can't tell from that information whether C or S corps) with the same name as the LLC. In effect, they are the equivalent to an owner/manager/board of directors for each of those LLCs. They're who/what ultimately makes decisions and sets policies, including any amendments to the governing document. I'd forgotten what they're called, but I just looked it up. It's an operating agreement. (Equivalent to articles of incorporation for a corporation.)

 

Here's the Wikipedia article on LLCs.

 

https://en.wikipedia.org/wiki/Limited_liability_company

 

If I may be so blunt as to ask, what the fuck are you doing reading financial disclosure forms and Form 990-PF (which, as I guessed, is the non-profit information return for a private foundation) on a Saturday night, or any other night, for that matter? I used to look at Forms 990 of 501©(3) charitable organizations on occasion, and I think I filled one out once or twice, but I never dealt with a charitable foundation.

 

Better you than me.

[Kuriousity]

Being nosey, my dear. The first thing I learned going into The Building is that if you want to hide something, you put it where you can easily see it. The average person will not pay attention to it...their eyes & brain gloss right over it if it fits in with its surroundings.

[amused1]

Delaware also has The Delaware Court of Chancery, a judge only judicial system for dealing with certain legal matters pertaining to corps and shareholders.

[Kevin Slater]

...DuPont, assuming it's still large enough to be in the Fortune 500...

 

I figured it's gotta be-- it's still one of the Dow 30. Turns out it comes in at #87 of the fortune 500.

 

Kevin Slater