What Is an LLC? Explanation and Examples

Written by Wesley Henderson

February 4, 2024

LLC on glass with people behind it

Operating as an LLC, you can reap a range of benefits, from flexible management (or membership) structures to pass-through tax advantages. Most importantly, your personal assets get maximum protection as they’re separated from those of your business.

If you’re just starting to form an LLC, however, you’ll need two things — easy-to-fill LLC templates, like the ones we offer, and examples of other successful LLCs.

With examples to emulate, you’ll have a roadmap for how you should go about your business operations. In this guide, we’ll show you some LLC examples that survived their early beginnings and thrive to this very day.

However, let’s get the basics out of the way first.

Understanding LLCs

Let’s begin by revisiting what an LLC is.

An LLC or limited liability company is a business structure that combines the elements of a corporation and a partnership or sole proprietorship. In particular, an LLC enables business owners to enjoy the asset protections of a corporation while retaining the level of control and oversight partnerships and proprietorships allow.

Besides having the “best of both worlds,” LLCs attract entrepreneurs due to other benefits, like tax benefits. Another advantage most business owners would attest to is the ease with which an LLC can be formed (especially with our legal templates).

Let’s talk about these advantages in greater detail.

Liability Protection

By establishing an LLC, business owners create a crucial shield between their personal finances and potential liabilities associated with the business.

This means that in the event of legal issues or financial challenges faced by the business, the personal assets of LLC members remain protected. By operating as an LLC, entrepreneurs perform a strategic move that ensures the financial well-being of those involved.

Flexible Management Structure

The versatility of an LLC extends beyond liability protection to its adaptable management structure. LLCs grant members the flexibility to opt for a member-managed or manager-managed approach. This flexibility is particularly beneficial for small businesses with a limited number of owners.

In a member-managed LLC, all owners play an active role in decision-making, fostering a collaborative environment.

On the other hand, a manager-managed LLC allows for designated individuals to handle daily operations, streamlining decision-making for businesses with a more hierarchical structure.

Pass-Through Taxation

LLCs offer a tax advantage known as pass-through taxation. In simple terms, the LLC itself is not subject to taxation at the business level. Instead, profits and losses are passed through to individual members, who report this income on their personal tax returns.

This approach avoids the issue of double taxation often associated with corporations, where both the business entity and its owners are taxed separately.

Ease of Formation and Compliance

Establishing an LLC involves few formalities and little paperwork, making it a practical choice for entrepreneurs looking to start their ventures promptly.

The ongoing compliance requirements for LLCs are also minimal. The minimal compliance requirements enable business owners to focus more on their operations and less on bureaucratic complexities.

Famous LLC Examples

Believe it or not, some of today’s biggest companies are LLCs and not corporations. Here are some famous LLC examples that you can emulate for maximum startup success:

Sony (Sony Music Entertainment LLC)

Sony, a global electronics and entertainment conglomerate, utilizes the Limited Liability Company structure for its music division, known as Sony Music Entertainment LLC. This allows Sony to navigate the complexities of the music industry with a streamlined and adaptable business model.

Nike

The renowned sportswear and athletic company, Nike, operates under the legal entity Nike, LLC.

This choice of business structure provides Nike with the advantages of limited liability protection and flexibility in management, allowing the company to innovate and compete in the dynamic world of sports apparel.

Hertz Rent-a-Car

The Hertz Corporation has been a major player in the car rental industry and operates as an LLC under the name The Hertz Corporation LLC.

This business structure enables Hertz to manage its operations efficiently while benefiting from limited liability protection, crucial in an industry with inherent risks associated with vehicle rentals.

eBay

eBay, a prominent e-commerce platform, conducts its business operations under the legal entity eBay LLC. This choice of structure provides the company with the flexibility needed to adapt to evolving market trends and innovations.

IBM

IBM, a global technology and consulting company, exemplifies the flexibility of the LLC structure by operating under the name IBM LLC.

This legal framework allows IBM to navigate the rapidly changing landscape of the tech industry with limited liability protection and efficient management practices.

LLC Examples: Proving That It’s Possible To Go From Inspiration to LLC

LLCs offer a dynamic blend of protection and flexibility — traits embraced by global leaders like Sony, Nike, Hertz Rent-a-Car, eBay, and IBM.

These industry titans found success with the LLC framework, and so can you. Embark on your LLC journey with legal templates and startup kits from DraftedLegal.

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