INTRODUCTION TO JOHN CUNNINGHAM’S LLC FORMS

LLC Ownership Structures, Management Structures
And Federal Tax Structures as the Basis for LLC Forms

Introduction. The two model operating agreements (“forms”) made available in this blog—namely, those designated as Forms 1.2 and 6.2—are copyrighted by Aspen Publishers and may be used only for purposes of the blog. They are representative of the 28 forms discussed below.

LLCs can have far more types of ownership structures, management structures and federal tax structures than any other business organization form. On the basis of these structures, LLCs may be divided into 10 main types. To facilitate the formation of these 10 LLC types, lawyers need a total of 28 main forms. For a table showing the 10 main types of LLCs, click here. For tables identifying each of the 28 main types of forms, click here.

All of the above 28 forms are available digitally as “generic” (i.e., non-state specific) forms on the compact disc that accompanies DRAFTING LIMITED LIABILITY COMPANY OPERATING AGREEMENTS. These forms can be readily tailored by users under specific LLC statutes. All 28 forms are also available digitally on the compact disc that accompanies DRAFTING DELAWARE LLC AGREEMENTS; these forms are already specifically tailored for use under the Delaware Limited Liability Company Act.

LLC ownership structures. The three main types of LLCs on the basis of their ownership structures are:

• Single-member LLCs owned by individuals;
• Single-member LLCs owned by entities; and
• Multi-owner LLCs.

LLC management structures. A wide variety of management structures are available to LLCs with the above types of ownership structures. For example, multi-member LLCs may have:

• General partnership management structures;
• Limited partnership management structures; or
• Corporate management structures.

Moreover, the management structures of multi-owner LLCs with general partnership management structures may be either simple or complex. Under a simple general partnership management structure, all members may participate directly in LLC management. Under a complex general partnership management structure, specified types of management matters are reserved to managing members or to management committees.

Finally, multi-member LLCs may have two main types of limited partnership management structures—namely, those substantially controlled by their managers (like many traditional investment limited partnerships); and those in which the members have very substantial voting rights and information rights.

LLC federal tax structures. LLCs with the above ownership structures may have any of a number of federal tax structures. Single-member LLCs owned by individuals may be taxable as sole proprietorships, C corporations or, if they meet certain requirements, S corporations. Single-member LLCs owned by entities may be taxable as “disregarded entities” or as C corporations. Multi-member LLCs may be taxable as partnerships, as C corporations or, if they meet certain requirements, as S corporations.

JOHN M. CUNNINGHAM

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