A Limited Liability Corporation, often abbreviated as an LLC, can serve several beneficial legal and financial purposes. Business professionals opine that such an entity might also serve those sponsoring various charities.
Limited Liability Corporation Overview
The establishment of an LLC provides a company’s owners or managers legal protection against incurring the debts or other liabilities such an entity might eventually accrue.
Forming An LLC
Certain guidelines must be followed to fully establish an LLC. Company owners must first name their LLC. Once a moniker is designated, the entity’s owners must complete a document known as an Articles of Organization declaration with the specific state within which the LLC will exist. This statement contains pertinent data such as the names and contact information of the company’s pertinent players, the business’s intended purpose and the identity of the corporation’s registered agent. This information must also be filed with the federal government so that the entity can designate an employer identification number, or EIN, to the LLC. The final step is to file the necessary paperwork and pay the required fees.
The Advantages Of Using An LLC For Charity
In recent times, many well-known businesspersons have used LLC entities to establish charitable endeavors. Some business professionals suggest that executing such action could prove more beneficial than creating a separate charitable foundation for several reasons including:
LLCs are not subject to the tax burdens that charitable contributions are. Ergo, an established LLC could save companies significant amounts of money over time.
LLCs Are Subject To Fewer Restrictions
Charity supports maintain more control of their philanthropic organization when such an entity is classified as an LLC. Typical charitable organizations are subject to certain restrictions that an LLC is not. Those who possess LLCs are at liberty to engage in actions such as political lobbying and advocating in favor of certain policies. Moreover, LLC owners are permitted to donate political contributions. Private philanthropic endeavors are strictly prohibited and might be subject to fines or other stiff penalties should such entities partake in these activities.
Owners of LLC entities are not required to disclose potentially private information such as the name, contact information, and a specific amount of money a contributor donated. Furthermore, if the LLC is dissolved, a member is permitted to retain the funds previously donated. Private philanthropic entities require such funds to be donated to another charitable endeavor.