Paramount benefits of an LLC are its protection of personal assets and credit reputation of business owners
Continuity of Limited Liability Company Existence
The life of an LLC is continued when it abides by its own Operating Agreement and by complying with regulations. Here is how an LLC can be dissolved, how it is taxed, and how members can choose to distribute profits.
A Limited Liability Company is dissolved in California by the consent of all the members unless all of the members have previously agreed in their operating agreement that such consent is not necessary. Unless otherwise agreed to, upon dissolution, the LLC must be wound up and liquidated.
An LLC can also be dissolved if it doesn’t amend its articles as required by law.
When an LLC is dissolved, its assets must be used to pay existing debts of the company, with any remaining monies distributed pursuant to the operating agreement.
An LLC is not taxed on its income. Members report income from the LLC on their individual income tax return.
A limited liability company may elect to be taxed as a corporation. Then, the LLC and its members are treated like a corporation and its members like shareholders.
California LLC Record Keeping Requirements
A California limited liability company needs to keep in its records a current list of the names and addresses of its members, the articles of organization, and all written operating agreements and amendments. An LLC must also keep complete, and any member has the legal right to inspect the LLCs records.
The principal benefit available by starting a California LLC is its limited liability protection to members. Other benefits include the ability to share profits and losses as the members agree. The pass-through tax treatment is preferable to many business startups.