Limited Liability Company (LLC)

Formation
File Articles of Organization (or Certificate of Organization if that is what your state requires) with the Secretary of State.  A written “Operating Agreement” as to how the company will be run is advisable and if there is more than one member of the LLC may in fact be necessary to conduct business with some organizations.

Administration
If there is only a single member then administration is very easy.  The Single Member has total control.  If there is more than one member in the LLC, the administration is similar to a Partnership.  It is generally a little more difficult than a Sole Proprietorship or a Single Member LLC because you have more people who have to agree on decisions with you.

Control
You may elect to have a Manager manage the LLC or you may have all Members manage the LLC.  (The Manager may also be a Member.)  The Member managed LLC is common.  However, if you have a Multi-member LLC, it is generally advisable to think through your planning carefully and have a Manager managed organization.

Asset Protection
This is very state specific.  How much asset protection you and your business are afforded depends on the state laws dealing with LLCs.  The asset protection afforded within a Limited Liability Company varies widely from state to state.  Kansas has very strong laws regarding asset protection for assets held within a Limited Liability Company.

Taxation
A Limited Liability Company is generally taxed the same as a General Partnership where the income flows through to the Members of the LLC whether it has been distributed or not.  However, the Members may elect to be taxed either as a corporation.  If they elect C-Corp taxation, the corporation is taxed on its profits and the owners are taxed on their dividends and the employees are taxed on their wages.  If the Members elect S-Corp taxation, The employees (most often Members) are taxed on their wages and the profits of the company are taxed to the Members without Self Employment taxes added.

Going Concern
A Limited Liability Company continues for a term of years that may be set in the Articles of Organization or in the Operating Agreement.  Some states limit an LLC to a term of years.  Kansas law has no such limit.

Discounting
If you have a Single Member LLC, there will be no discount available because the Member has complete control.  There is a possibility to get a very slight discount if the alienation rights are severely limited, but recent case law is discouraging.  Multi-Member LLCs discounts vary based on two things; 1) The laws of the state in which the Limited Liability Company is established and 2) the restrictions placed in the Operating Agreement.  Kansas has very favorable laws with regards to the discounting of business interests restricted within a Limited Liability Company.  If the Operating Agreement is properly drafted, in a state such as Kansas or Wyoming the discount can be very significant.  There have been instances (though very few) where the IRS approved discounting of over 70%.  This means that the value of the business interest you own may be significantly less than the value of the assets placed within the business.  This leads to a lot of planning possibilities in larger estates.