The Limited Liability Company commonly referred to as LLC originated in Germany in the 1890’s variations of the German LLC model other countries throughout Europe began passing legislation allowing for the formation of the Limited Liability Company.
Wyoming was the first state in the America to enact legislation allowing for the formation of the LLC. That was in 1977, today every state has passed legislation allowing for the formation of the LLC and it has quickly become the most popular entity choice of small business owners.
The LLC appeals to the business community because it requires less maintenance than a corporation and allows for flexible ownership agreements because unlike the corporation ownership is based on percentages not shares. Owners of an LLC are referred to as members.
The guiding document that governs the LLC is called an Operating Agreement and is generally drafted by the members upon the initial post filing meeting. The Operating Agreement typically lists the members, percentage of ownership and other guiding provisions that will determine how the company will be managed. The Operating Agreement is essentially a private partnership agreement between the members and is not filed with the state.