Advantages of a LLC

The main advantage of a Colorado limited liability company is that its members are protected from personal liability from business decisions or actions of the LLC. This means that if the LLC incurs debt or is sued, members are not required to satisfy claims with their personal assets. This is similar to the liability protection afforded to shareholders of a corporation. Keep in mind, however, that liability protection is limited in scope. Members of an LLC are not shielded from their tort actions. such as automobile accidents.

There are fewer restrictions on profit sharing in an LLC as members distribute profits as they deem appropriate. Members might contribute different amounts of capital or sweat equity. Consequently, it is up to the members themselves to decide who has earned what percentage of the profit or loss of the LLC. This is typically spelled out in the LLC operating agreement.

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