When the State of Wyoming first passed legislation to allow a new type of Hybrid Company in 1977, which provided pass-through tax treatment and limited the owners’ personal liability for the company, almost nobody cared. For ten years almost nothing happened.
It took 14 years before Delaware revolutionized the legal world by drafting the sleekest piece of company legislation ever written. The result was the modern LLC, now available in almost every State, which today accounts for more than half of all new companies formed in the United States.
Delaware LLCs are the most flexible form of company ever devised. Because each LLC is governed by its own internal “Company Agreement” that sets up the structure AND because you have “Freedom of Contract” to draft that “Company Agreement” any way you want. The result is that you can create the structure of the company to fit the situation like a glove.
For example, one “Company Agreement” may be perfect for a holding company which holds real estate while protecting the owners from creditors and bankruptcy, while another “Company Agreement” may be just perfect for a family business where several members of the family own and operate different parts of the business. Two completely different business situations, but because of “Freedom of Contract” the same entity will work, each with its own unique structure.
LLCs are also the toughest entity for a creditor to break through, they require the least amount of paperwork and expense to maintain and they are easily formed for just a few hundred dollars.