llcIn many sites and questions here I see the acronym LLC. What does this mean? Does it indicate a specific type of company? For which countries is the LLC concept valid?
The Tag Wiki has poor information about this.
What does this mean?
Jurisdictions often recognise a number of different “forms” through which business may be conducted. The forms available and the differences between them are a matter for each jurisdiction, so answering this question in the general case is surprisingly hard.
Two of the simplest forms are that where an individual starts undertaking a trade on his own personal account, with little to no formalities; and that where multiple individuals start undertaking a trade on their joint account, under some mutual understanding of how their affairs are arranged. In such cases, there is often no limit to the extent to which those individuals can be held personally responsible for the acts of their businesses: e.g. if their business were to default on a large debt, they could be sued personally for everything that they own (and, ultimately, be declared bankrupt). The individuals are said to have unlimited liability.
Recognising that this risk discourages people from going into business, most jurisdictions have decided also to recognise forms of business in which the individuals’ liability is limited in some way: e.g. the liability of the individuals above might be limited only to their business’s assets. The trade-off is that it usually involves increased formalities and obligations. The individuals are said to have limited liability.
The word company (like “companions”) literally refers to people who “come together” (or associate) for a common purpose. Thus any association whose members have limited liability could be described (at very least colloquially) as a limited liability company; indeed, this is for what “LLC” is an initialism in the USA and Egypt.
In the Philippines, “LLC” is an initialism for “limited liability corporation”. The word corporation (like “corpse”) literally refers to a “body” (or a person) that has been created by law. Since the law recognises corporations as people, they have many of the same rights and obligations as you and me: e.g. they are litigious; they have capacity to contract; they can own assets/owe liabilities; etc. Despite the language, it is not the corporation itself whose liability is limited but rather the people who form it. Thus any person created by law whose members have limited liability could be described as a limited liability corporation.
Does it indicate a specific type of company?
In the three countries mentioned above, “LLC” does indeed refer to specific forms of undertaking that are distinct from other possibilities. However, within each of those countries the exact nature/requirements/obligations/etc differ:
An LLC in the United States is unincorporated: that is, it does not have its own legal personality and therefore all assets and liabilities are technically owned/owed by the members rather than the company in its own right. In order to benefit from limited liability, the members of such an LLC must be sure to hold the business’s assets clearly apart from their own personal assets.
An LLC in Egypt or the Philippines is incorporated (note that this is so even though, as in the USA, the Egyptian term is an initialism for “company” and not “corporation”). There are a number of specific differences between the entities in the two countries, but they are somewhat beyond the scope of this answer.
In countries where “LLC” is not a specifically recognised business vehicle, the term might erroneously be used to refer to types of association that bear some other name yet nevertheless have limited liability. In particular, it is often used (in lay contexts) to refer to entities that have similar characteristics to a US LLC—see Wikipedia for international equivalents.
For which countries the LLC concept is valid?
As indicated above, one can either interpret the concept in a general sense (in which case most countries have some form through which people may associate to conduct business with limited liability), or it can be interpreted to mean a specific type of entity bearing that name (in which case it only exists in the relevant jurisdiction: I’m only aware of the three countries mentioned above, but there may well be some others).
LLC stands for Limited Liability Company. In the USA it’s a legal form of a company mostly for small companies that combines aspects of a corporation and a sole proprietorship/partnership. You’re still taxed individually, have similar reporting requirements but you have “limited liability” which essentially means you are only accountable for the business’ assets and losses, and your personal assets can’t be touched from company debt.
If someone were to sue a LLC, they would not be suing the owners but the LLC entity itself, and would only be entitled to assets the LLC owned.
More information here: http://en.wikipedia.org/wiki/Limited_liability_company
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