Winter 2015 Article
When confronted with the choice between a corporation and a limited liability company, clients are sometimes inclined to choose a limited liability company (or LLC). Limited liability companies are perceived as an appropriate business vehicle for smaller ventures and to manage real estate investments in a very informal and flexible manner. Limited liability companies are often compared with S.r.l.’s in Italy or GmbH’s in Germany, which require a smaller capitalization and are thus perceived as less costly. The comparison, however, is not always appropriate, especially because LLC laws in the United States are largely based on the law of partnerships. A limited liability company is first of all a contract among members, rather than a rigid statutory creation with specific structures and provisions created by law. If this allows more flexibility, it also leaves the door open to uncertainties and ambiguities.