Question

This discussion board is open for any questions or comments in a new thread, but please address the following 1. Should we allow business to be conducted with limited liability entities? This arrangement obviously benefits investors, but does it harm society? If so, how? Many corporate scandals are caused by the separation of ownership from management Investors own companies, but executives manage them. Investors are said to "vote with their feet", meaning that if an investor doesn't like what a company is doing, she sells her shares and takes her money elsewhere, rather than voting to change the conduct of the business. It is easier to pick up and move on than it is to get involved and organize change within a large company. The fact that publicly traded companies may be owned by hundreds of thousands of small investors with only a few shares of the company each means that most of those investors cannot practically participate in the management of the companies in which they invest. If limited liability was eliminated, investing in this manner would be extremely risky, as your personal assets would be at risk from the liabilities of each company you invested in How might this change business ownership? What impact would this have on society? 2. Should we ever create partnerships by estopper? Why or why not?

Answer 1

A limited liability company (LLC) is the a specific form of a private limited company.  it is a legal form of a company that provides limited liability to its owners in many jurisdictions. LLCs are well known for the flexibility that they provide to business owners; depending on the situation, an LLC may elect to use corporate tax rules instead of being treated as a partnership and, under certain circumstances, LLCs may be organized as not-for-profit.

  

As the name implies, members' liabilities for the debts and obligations of the LLC are limited to their own investment. This is one of the key advantages of a limited liability company. In other words, if your company gets sued, your personal assets, like bank accounts and real estate, are protected.

Although LLCs have some attractive features, they also have several disadvantages, especially concerning the structure of a corporation. Depending on state law, an LLC may have to be dissolved upon the death or bankruptcy of a member.

This is in contrast to a corporation, which can exist in perpetuity. An LLC may not be a suitable option when the founder's ultimate objective to become a publicly-traded company.

so we can conclude that ,In any manner the set up of an LLC does not harm the society.

Disadvantages of an LLC

The LLC does have some additional administrative requirements when compared to a sole proprietorship or limited partnership. They are typically related to keeping liability protection in place for the LLC members.

Cost. Compared to a sole proprietorship or partnership, an LLC is a little more expensive to operate. The start-up cost is only slightly more than for a corporation, but proprietorships and general partnerships do not have start-up or annual fees.

Taxes. A limited liability company owner may have to pay unemployment compensation for him or herself, which he or she would not have to pay as a sole proprietor.

Banking. Checks made out to a limited liability company cannot be cashed; they must be deposited into a corporate account. Some banks have higher fees just for businesses that are incorporated.

Separate records. The owners of a limited liability company must be careful to keep their personal business separate from the business of the limited liability company. The limited liability company must have its own records and should have minutes of meetings. Money must be kept separate. Businesses should maintain seperate recrods and the structure of a company might make it easier to do so.