Corporate Personality & Limited Liability
Corporate personality implies that the state recognizes the corporation has an identity and entity separate from that of its founders. The corporate personality can possess assets and debts in its own name.
Limited liability implies that the corporation's liability to the external world is restricted.
Limited liability corporations---or LLCs---are organizations that use combined features of sole proprietorships, partnerships and large companies.
Other People Are Reading
-
Significance
-
The main appealing aspect of an LLC is that the company's legal responsibility and accountability to the external world is limited. In case the LLC is liquidated, the creditors can claim assets of the corporation only. Creditors have no claim on the owners' personal assets.
Benefits
-
The LLC has a tax-pass through structure. The profits that the corporation makes are directly distributed to the owners. The owners then file for taxes individually.
-
Limitation
-
The LLC's operations come to a halt in the event of death, delinquency, bankruptcy and permanent illness of the owners. This would not be the case for a company.
-
