A limited liability company (LLC) is an entity type that offers its owners liability protection similar to that of a corporation while allowing owners to avoid some of the legal formalities and tax rules that apply to corporations. An LLC is neither a corporation nor a partnership but has attributes of both. It is one of the most flexible and efficient ways to structure an entity.
The owners of the LLC are “members” who share equally in the company’s profits and losses unless otherwise agreed to by the members. See Tex. Bus. Orgs. §§ 101.052(c), 101.101–.104, 101.205. Members may be individuals, partnerships, corporations, or any other legal entity. See Tex. Bus. Orgs. Code §§ 1.002(69–b), 101.102(a). LLCs may have any number of members. See Tex. Bus. Orgs. Code § 101.101(a). In a member-managed LLC, all members are responsible for managing the business. See Tex. Bus. Orgs. Code § 101.251(2). In a manager-managed LLC, the business is managed by managers who may be, but are not required to be, members of the LLC. See Tex. Bus. Orgs. Code §§ 101.251(1), 101.306.
Chapters 5 through 11 in this manual provide more information on the particulars of forming and operating an LLC. For information on dissolution, see chapter 21, particularly sections 21.3:1 and 21.5:1.