LLCs — Top Ten (or So) Mistakes, and Why They Are Important

Abstract

Nationwide, more limited liability companies are being formed than any other business entity. In Colorado, eight times more LLCs were formed in 2018 than corporations, and other entity forms are minuscule in comparison. The problem with LLCs, however, is that they are extremely flexible, contract-driven, entities and few persons forming LLCs pay sufficient attention to the details.

This paper looks at those details that are frequently overlooked by persons forming LLCs (in many cases without competent legal assistance, if any lawyer has been involved at all).

Keywords: LLC, Limited Liability Company, Formation, Operating Agreement, Mistakes

JEL Classification: K10, K20, K22