In the event that the LLC Agreement is silent with respect to voting rights, the LLC statutes vary in their approach, with some allocating votes on a per capita basis, while others allocate votes on the basis of the value of the members' contributions or allocated share of profits. The LLC Agreement may also provide for the admittance to the LLC of new members. Advantages of LLCs over other forms of business organizations. Moreover, a traditional C corporation may not be able to make immediate use of its operating losses since such losses can generally only be used by such entity to offset income earned in other years. If an LLC has more than one member and is properly organized, it will receive the same favorable pass-thru tax treatment as a partnership.
S corporations have stringent qualification rules.
LLCs are not subject to any of these restrictions. Thus, particular attention must be paid in drafting those provisions of the LLC Agreement which have some bearing on the salient corporate characteristics. For example, LLC Agreements often contain restrictions on the transferability of all or a portion of the members' interests. These restrictions are intended to ensure that the corporate characteristic of free transferability of interests is not present. Several new ventures and funds are now coming to market in the form of LLCs instead of limited partnerships.