Limited Liability Partnerships Act 2000 (c. 12)
(1) For a limited liability partnership to be incorporated-- (a) two or more persons associated for carrying on a lawful business with a view to profit must have subscribed their names to an incorporation document,
(1) For a limited liability partnership to be incorporated--
(a) two or more persons associated for carrying on a lawful business with a view to profit must have subscribed their names to an incorporation document,
(emphasis mine)
For the LLC, I can't provide a clear reference like that. But we're talking about limited liability companies that are generally used in a for-profit frame. (see above when it's posted... :))
There's no such qualification either in states' Uniform Commercial Codes (which each determine licensure of LLC and LLP within their respective jurisdictions) or in US Tax Code. Here benefits of "limited liability" have essentially nothing to do with potential profitability of an enterprise. Rather, ordering all claims on the income, if any, of the enterprise and indemnity enjoyed by participants.
See for example Definition of Limited Partner for Self-Employment Tax Purposes (IRS) and digest of The Revised Uniform Limited Liability Company Act .
he LLC effectively eliminates the traditional "Hobson's" choice between possessing limited liability and possessing the passthrough tax treatment of a partnership.... An LLC is an unincorporated association that is a separate legal entity distinct from the "owners" or members and is not merely an aggregation of the members.... An LLC can be formed for any business purpose as long as the purpose is a lawful one.... An LLC will be classified as an association and taxed as a partnership unless the LLC elects to be taxed as a corporation under the Self-Classification Regulations of the IRS.... The RULLCA sets forth certain mandatory provisions but distinguishes between items that the members cannot either vary or eliminate, items that the members can vary but not eliminate, items that the members cannot restrict, and items the members cannot unreasonably restrict.
An LLC is an unincorporated association that is a separate legal entity distinct from the "owners" or members and is not merely an aggregation of the members....
An LLC can be formed for any business purpose as long as the purpose is a lawful one.... An LLC will be classified as an association and taxed as a partnership unless the LLC elects to be taxed as a corporation under the Self-Classification Regulations of the IRS....
The RULLCA sets forth certain mandatory provisions but distinguishes between items that the members cannot either vary or eliminate, items that the members can vary but not eliminate, items that the members cannot restrict, and items the members cannot unreasonably restrict.
explicitly...
SECTION 104. NATURE, PURPOSE, AND DURATION OF LIMITED LIABILITY COMPANY. (a) A limited liability company is an entity distinct from its members. (b) A limited liability company may have any lawful purpose, regardless of whether for profit. (c) A limited liability company has perpetual duration. www.nccusl.org, 2006
(a) A limited liability company is an entity distinct from its members.
(b) A limited liability company may have any lawful purpose, regardless of whether for profit.
(c) A limited liability company has perpetual duration.
www.nccusl.org, 2006
Would you say LLCs were very largely/mostly used for non-profit purposes?
I couldn't say. Maybe the org has some firm population and firm size (1 - 1,000+) stats, maybe firm by NIC.
The key to understanding business classes here is understanding that selection is driven by concommitant tax advantage strategies and reporting requirements of each type so to shelter earning distribution -- whatever the source of income. 501(*) is a tax category of organization, whether or not incorporated, whether or not partnership, that indemnifies the firm according to strict regulation by tax agents of its business activities rather that its profit (loss) expectation. Administration is expensive. Diversity is the key to economic and political evolution.
