<P> Under 6 Del . C. Section 18 - 101 (7), a Delaware LLC operating agreement can be written, oral or implied . It sets forth member capital contributions, ownership percentages, and management structure . Like a prenuptial agreement, an operating agreement can avoid future disputes between members by addressing buy - out rights, valuation formulas, and transfer restrictions . The written LLC operating agreement should be signed by all of its members . </P> <P> For U.S. federal income tax purposes, an LLC is treated by default as a pass - through entity . If there is only one member in the company, the LLC is treated as a "disregarded entity" for tax purposes, and an individual owner would report the LLC's income or loss on Schedule C of his or her individual tax return . Thus, income from the LLC is taxed at the individual tax rates . The default tax status for LLCs with multiple members is as a partnership, which is required to report income and loss on IRS Form 1065 . Under partnership tax treatment, each member of the LLC, as is the case for all partners of a partnership, annually receives a Form K - 1 reporting the member's distributive share of the LLC's income or loss that is then reported on the member's individual income tax return . On the other hand, income from corporations is taxed twice, once at the corporate entity level and again when distributed to shareholders, thus more tax savings often result if a business formed as an LLC rather than a corporation . </P> <P> An LLC with either single or multiple members may elect to be taxed as a corporation through the filing of IRS Form 8832 . After electing corporate tax status, an LLC may further elect to be treated as a regular C corporation (taxation of the entity's income prior to any dividends or distributions to the members and then taxation of the dividends or distributions once received as income by the members) or as an S corporation (entity level income and loss passes through to the members). Some commentators have recommended an LLC taxed as a S - corporation as the best possible small business structure . It combines the simplicity and flexibility of an LLC with the tax benefits of an S - corporation (self - employment tax savings). </P> <Ul> <Li> Choice of tax regime . An LLC can elect to be taxed as a sole proprietor, partnership, S corporation or C corporation (as long as they would otherwise qualify for such tax treatment), providing for a great deal of flexibility . </Li> <Li> A limited liability company with multiple members that elects to be taxed as partnership may specially allocate the members' distributive share of income, gain, loss, deduction, or credit via the company operating agreement on a basis other than the ownership percentage of each member so long as the rules contained in Treasury Regulation (26 CFR) 1.704 - 1 are met . S corporations may not specially allocate profits, losses and other tax items under US tax law . </Li> <Li> The owners of the LLC, called members, are protected from some or all liability for acts and debts of the LLC, depending on state shield laws . </Li> <Li> In the United States, an S corporation has a limited number of stockholders, and all of them must be U.S. citizens; an LLC may have an unlimited number of members, and there is no citizenship restriction . </Li> <Li> Much less administrative paperwork and record - keeping than a corporation . </Li> <Li> Pass - through taxation (i.e., no double taxation), unless the LLC elects to be taxed as a C corporation . </Li> <Li> Using default tax classification, profits are taxed personally at the member level, not at the LLC level . </Li> <Li> LLCs in most states are treated as entities separate from their members . However, in some jurisdictions such as Connecticut, case law has determined that owners were not required to plead facts sufficient to pierce the corporate veil and LLC members can be personally liable for operation of the LLC (see, for example, the case of Sturm v. Harb Development </Li> <Li> LLCs in some states can be set up with just one natural person involved . </Li> <Li> Less risk of being "stolen" by fire - sale acquisitions (more protection against "hungry" investors). </Li> <Li> For real estate companies, each separate property can be owned by its own individual LLC, thereby shielding not only the owners but their other properties from cross-liability . </Li> </Ul>

A llc has no restriction on the number of owners