A Brief Primer on Indiana LLCs.
- An Indiana LLC is a “hybrid entity”, one in which co-owners enjoy the liability protection of limited partner status and the management participation feature of the general partners. Indiana adopted its limited liability company statute, known as the Indiana Business Flexibility Act, in 1993.
- The owners of an Indiana LLC are called “members” – akin to shareholders in a corporation.
- An Indiana LLC can be managed by either its members or a board of managers.
- The Indiana Business Flexibility Act provides default rules defining the rights, duties and obligations of the members, and their relationship among each other and with the Indiana LLC itself. Most of these rules may be altered by the terms of an operating agreement.
An Indiana LLC is formed upon filing articles of organization with the Indiana Secretary of State’s office.- An Indiana LLC itself usually does not pay any tax, although some states other than Indiana do subject limited liability companies to franchise taxes.
- A major difference between a partnership and a limited liability company is that each of its members enjoys liability protection. Another major difference is that in recent years, most states, including Indiana, have recognized limited liability companies with only one owner. This means that you can protect yourself from personal liability and yet still operate your business, in many ways, as you would a sole proprietorship (presuming you comply with the formalities of the limited liability company).
- These so-called “single member LLCs” offer an important tax advantage – annual information can be reported on the owner’s individual tax return, and no separate tax return or identification number is required.
Tags: Indiana LLC, LLC
