Four surgeons conducted their medical practices through an LLC they owned. The LLC obtained a $1.5 million loan from Emprise Bank. It was secured by personal guarantees of the four doctors, each for $200,000, plus an additional joint $375,000. Two doctors then moved away. When the LLC failed to pay, Emprise moved to enforce the personal guarantees by the two remaining doctors and won a judgment. Those two doctors contended that they had the right to sue the doctors who left as they injured the LLC. Are all four doctors liable?

In many states, LLCs can have a limited life. When a member joins or leaves an LLC, some states may require the LLC to be dissolved and re-formed with new membership — unless they have already an agreement in place within the LLC for buying, selling, and transferring ownership.

Explanation:

An LLC has advantage of both the corporation and partnership business structures.

LLCs protect business owners from personal liability in most instances, their personal assets — like vehicles, house, and savings accounts — won't be at risk in case LLC faces bankruptcy or lawsuits.

Profits and losses can get passed through to your personal income without facing corporate taxes. But, the LLC members are considered self-employed and must pay self-employment tax contributions towards Medicare and Social Security.

in many states, LLCs can have a limited life. Some states may require the LLC to be dissolved and re-formed with new membership when a member joins or leaves an LLC. This will not be required however if there is already an agreement in place within the LLC for buying, selling, and transferring ownership.

LLCs are a good choice for medium- or higher-risk businesses, owners with significant personal assets that they want to be protect, and owners who want to pay a lower tax rate than they would with a corporation.