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Limited Liability Company (LLC) Answers & Advice

Asked about 3 years ago - Boston, MA

What can LLCs do to issue stock (and what can't they do)?

The following web page
(http://www.incorporate.com/comparing_corporatio...) reads:

“Disadvantages of an LLC
...
* Cannot issue stock”

Another web page
(http://www.1065accountant.com/llc-disadvantages...) reads:

"Limited Liability Company(s) (LLCs) cannot take advantage of incentive stock options, engage in tax-free reorganizations, or issue Section 1244 stock."

And on government websites —
http://www.sba.gov/smallbusinessplanner/start/c...
"LLCs do not have stock"

http://www.congress.gov/cgi-bin/cpquery/?&sid=c...&
"Many SBICs now are organized as limited liability companies and partnerships, which do not have stock"

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Attorney answers (1)

V. Carl Walker

Reputation Level 9

Answered about 3 years ago. Contracts / Agreements Lawyer in New York, NY.

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Well, it is true that LLCs can not issue stock. This is not, however, a disadvantage. You can distribute membership interests in an LLC without any need for the formality of stock. If you prefer stock, then you can structure your LLC to have certificates that work just like stock.

LLCs are more flexible than corporations as the law does not dicatate how they will operate. The choice is yours.

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