Limited liability companies are primarily designed to:
A)allow a portion of their owners to enjoy limited liability while granting the other portion of their owners control over the entity.
B)provide the benefits of the corporate structure to foreign-based entities.
C)spin off a wholly owned subsidiary.
D)allow companies to reorganize themselves through the bankruptcy process.
E)provide limited liability while avoiding double taxation.

Question

Quizplus · Accepted Answer

The primary purpose of limited liability companies (LLCs) is to provide limited liability protection to their owners while avoiding double taxation. This means that the owners are not personally liable for the company's debts and can only lose the amount of money they have invested in the company. Additionally, LLCs are taxed like partnerships or sole proprietorships, meaning that the profits and losses are passed through to the owners' personal tax returns and are not subject to corporate income tax. This makes LLCs an attractive option for small businesses and entrepreneurs. None of the other options listed accurately reflect the primary purpose of LLCs.

Limited Liability Companies Are Primarily Designed To