The Rise of the LLC: A Matter of Trust
Filed Under: Delaware, Limited Liability Company, Trend Report
Tags: Delaware, Incorporating, Limited Liability Company
If you had to guess which entity is number one in Delaware – would you say an Inc. or LLC? According to a recent report found in the Fordham Journal of Corporate and Financial Law; the statistics are staggering. Since 2004 the number of LLC’s filed in Delaware has surpassed the number of Incorporations by almost 3 – 1.
The total number of LLC’s filed in DE from 2004 to 2009 was 519,000. The total number of Inc.’s filed during the same period was 189,000. There were 329,000 more LLC’s filed in DE than Inc.’s in that six year period. The most dramatic increase in the LLC’s filed occurred between 2005 and 2007. Through that two-year period there was an increase of 40% more LLC’s filed when compared to 2004. In 2007, there were 112,982 LLC’s filed in DE versus 68,807 filed in 2004. The total number of Incorporations has fallen every year since 2005. The dramatic economic crisis which began in 2008 had an impact on each entity type; although the LLC still out paced the Inc. by more than 50%. Why are these numbers important? What can we learn from them?
Well, first of all when you consider that the Delaware Incorporation has been in existence since the 1800’s and the Delaware LLC since 1991 – this change has obviously occurred over a very short period of time. The LLC is now the most popular type of entity filed in America. In fact; according to the study, the LLC is being filed by almost 11 to one over the Inc. in some other states.
Business people from all walks of life are placing a great deal of trust in this relatively young corporate entity type. In the past, most business endeavors sought the structure of the corporation to provide stability. The security, flexibility and informalities associated with the LLC have made it an obvious choice for many entrepreneurs and investors. We now live in a world that is more litigious than ever and your business deserves ample protection as do you and your assets. The LLC can typically shelter any type of business or assets and provide separation for the individuals involved. It is very simple to operate and the burden of management associated with a stock company is greatly reduced.
However, the most important factor is still – trust. The LLC has withstood the legal challenges of the past 19 years and has established itself as a very worthy entity. Also, we can conclude that the LLC is helping many individuals and small groups realize their business potential. The LLC is very well suited for a more intimate business strategy. The privacy offered is also appealing to many; since we are all faced with the threat of identity theft in this age of immediate information.
Harvard Business Services, Inc. has been filing LLC’s since 1991. We know firsthand how valuable the LLC is to most business people. The LLC may be just right for you and if there is strength in numbers…..well you will be joining a very strong group! We can help you file your LLC today.
Interesting information, however had a question about the title. Rise and Fall of the LLC I do not think that the LLC has fallen at all, just the economy slumped. Or has there been a recent ruling in the courts that makes the LLC less appealing?
Jeorge, Thanks. You make a good point, we are going to change the title of the article.
Unfortunately, more lawyers are suing LLC’s with sole membership as “john doe dba john doe, llc. A cautionary note that llcs must be certain that they keep their documentation up to date including minutes, state filings, etc.