A limited liability company (hereinafter referred to as LLC) is a commercial company with legal personality. Typically, an LLC's equity is the total face value of its equity interests. One of the key features and benefits of an LLC is the fact that shareholders cannot be held personally responsible for the company's debts or liabilities - only the company's assets themselves are at risk. However, the issue of limitation of liability also depends on the national legislation of each jurisdiction. In general, an LLC is a corporate structure that combines the simplified taxation of a partnership with the principle of limited liability of a corporation. For an international trading company it can be the perfect solution as long as the jurisdiction is well chosen.

Functions of a limited liability company
There are no particular circumstances under which you would be obliged to incorporate a limited liability company. An LLC is a type of legal entity that successfully mixes the majority of the most desirable attributes of other company types, which explains why most entrepreneurs opt for an LLC when starting a business. Furthermore, in many offshore jurisdictions there are simplified accounting and record-keeping requirements for LLCs.

Usually, we would advise our clients to consider an LLC as a viable option when they are looking to start up a trading company or a small business within certain limits. LLCs are perfectly suited to those seeking an opportunity to run a business (locally or internationally) and distribute profits at minimum expense. However, you should always bear in mind that an LLC usually does not offer an effective mechanism for introducing a partner with limited voting capacity, or numerous investors, to your business. In these cases, we suggest you consider a limited partnership or a joint-stock company, as these may offer more effective ways to achieve your goals. Incorporating an offshore company in a tax haven jurisdiction may be a good way to reduce maintenance costs.

Advantages and disadvantages of a limited liability company
As with any other legal entity, the LLC has its own pros and cons. Depending on the circumstances and your chosen jurisdiction, there may be other peculiarities in addition to those listed below. That is why we suggest that you consult our lawyers prior to initiating the incorporation process.

The main advantages of an LLC are:

Limited liability of the shareholders with respect to creditors
Smaller minimum capital than for a joint-stock company
Flexible structure: it can operate with one or multiple shareholders
Minimal requirements for board and directors; no supervisory body
Flexibility with regard to taxation
Relatively quick and easy incorporation procedure
Simple bookkeeping and paperwork
Usually one person can be shareholder, director and employee (if required)
The primary disadvantages are:

Limited third-party investment options
The company cannot issue shares publicly