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Home > Offshore Services > Offshore Company Formation > Types of Offshore Company > The Limited Liability Company
The Limited Liability CompanyWhat exactly is it? The simplest way of describing a limited liability company is perhaps to compare it to the other legal entities used for business transactions, namely the company limited by shares and the partnership. The company limited by shares, or corporation, provides its owners with protection against creditors but at a cost. It is a separate legal person for tax purposes and the tax it pays on its profits is not usually available as a credit against the further tax liability of the shareholder when a dividend is paid. If the company makes a loss, the shareholders cannot obtain relief against their own liability. A partnership is transparent for tax purposes meaning that it is not itself taxed and that the income and losses flow through directly to the partners and are taxed in their hands. All the partners are however jointly and severally liable for the debts of the partnership. Their liability can be reduced, by using a limited partnership, but this is not always a satisfactory solution. The limited liability company, on the other hand, combines some of the best features of the corporation with those of the partnership:
The limited liability company may be run by the owners or by a manager and it is governed by Articles of Organisation, which, broadly, perform the same function as the Articles of Association of a corporation.
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