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Is there a limited liability corporation for more than one owner?

If you're considering launching your business concept, you may feel overwhelmed trying to sort out the differences in the framework of incorporation structures. You may appreciate the liability protection that setting up a limited liability corporation (LLC) provides, yet you may have a business partner and think that you need to set up a partnership or a corporation instead. You may find that incorporating your business as a multi-member LLC (MMLLC) is just the type of formation right for you and your concept.

An MMLLC is precisely what the name suggests. It offers some of the same protections an LLC provides a single owner. It just allows two or more individuals or owners to enjoy some of the same liability protections that a single-member LLC does.

Benefits of setting up an MMLLC

There are many positives associated with incorporating your business concept as an MMLLC.

First, there's a tremendous amount of flexibility in who can be corporate members and how many you can have. They can be other corporations, single-member LLCs or individuals, and there's no cap on them. Not all of the MMLLC's members have to be U.S. citizens either.

MMLLCs also don't have to pay corporate taxes. You and your fellow members can choose to have your company taxed as either a C- or S-corp if you want, though.

Downsides to setting up an MMLLC

There a few drawbacks to MMLLC incorporation. First, you must register it with the state. None of the MMLLC's owners can work for their company without changing their tax status, either.

Other downsides to MMLLC incorporation center around taxation. All of the company's members must pay self-employment taxes for any profits they make. There may also be additional hoops you have to jump through when filing business taxes for the MMLLC.

Members who set up an MMLLC don't receive the same degree of liability protection that LLC ones enjoy. They can face negative consequences if a fellow member commits fraud, fails to pay their debts, misuses company funds or inadequately maintains financial and other business records.

Setting up your business as an MMLLC isn't a choice that you should take lightly. You and your fellow members may benefit from meeting with a business formation attorney, an accountant and other Cincinnati professionals to gain a better perspective as to all the pros and cons associated with choosing this structure for your Ohio company.

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