A limited liability company (LLC) is a hybrid entity that combines desirable characteristics of corporations, limited partnerships and general partnerships. Most significantly, LLCs offer a full liability shield and maximum flexibility with respect to federal income taxation. In 1977, Wyoming became the first state to enact an LLC statute. Wyoming Wyo. Stat. §§ 17-15-101 to 17-15-136 (1977). Since then, every state in the United States has enacted a form of LLC law. Although an LLC is not well-suited for every endeavor, it is the entity of choice in most cases.
One of the few criticisms of LLCs has been that LLC law varies significantly from state to state. The Business Law Section of the American Bar Association drafted a prototype LLC act, which was presented in 1992. In 1994, the National Conference of Commissioners on Uniform State Laws (NCCUSL) presented the Uniform Limited Liability Company Act (ULLCA) and, in 2006, the NCCUSL presented the Revised Uniform Limited Liability Company Act (RULLCA). Some states followed a particular model act, others largely crafted their own statutes. So, without question, LLC law is not uniform. For the most part, this does not present a problem because, as to the internal affairs of the LLC, the statutes are largely default rules which can be modified by way of an operating agreement.
