LLC requirements

This section discusses some of the LLC requirements necessary for forming an LLC.

LLC requirements for ownership

Most states allow an LLC to be formed by one or more people. Only the District of Columbia and Massachusetts currently require two members (who may be spouses) to form an LLC. Other business entities, such as a corporation or another LLC, can be LLC owners. LLC members need not be residents of the state where they form their LLC or residents of the United States.

LLC management

LLC are normally managed by all the LLC owners (also called LLC members). This LLC management set up is known as "member-management." But state law also allows for management by one or more specially appointed managers, who may be LLC members or non LLC members. This LLC management arrangement is known as "manager-management."

In other words, an LLC can appoint one or more of its LLC members, or one of its CEOs or even a person contracted from outside the LLC, to manage its affairs. This manager setup is somewhat atypical and normally only makes sense if one person wishes to assume full-time control of the LLC, with the other owners acting as "passive" investors in the LLC.

LLC formation requirements

Click here to read about LLC formation requirements.