Attracting Investments

• Though a limited purpose LLC can be formed for many different types of projects, one common instance occurs when a film company and an independent filmmaker form an LLC to cover the production of an individual movie. Jon Garn on the website for the law firm Gallagher, Callahan and Gartrell writes that financing is easier to attract and manage when an LLC is formed for the sole purpose of producing a movie.
  
  

Profit Timeline

• Investors are attracted to become members of a limited purpose LLC because they have a reasonable expectation of when to expect a return on investment: that is, when the project is completed. If the investment was made in a company with an ongoing operation, profits on any one project could be used to fund other projects. Investors only have to judge the likelihood of success for an LLC's individual project rather than consider the profit potential of a regular company's entire operation.
  
  

Protecting Lenders

• A limited or single-purpose LLC is often the choice for owning and managing income-producing real estate. The online newsletter for the law firm Thomsen and Nybeck notes that many commercial lenders require the borrower of a loan for such real estate to be a single-purpose LLC. If the company were involved in other business activities, a loss in those activities could bring down the real estate project for which the loan was made. Lenders approve the loan based on the merits of the project alone, and want the LLC to succeed or fail on its own rather than be tied to other business activities.
  
  

Keeping it Simple

• Forming corporations to manage a single project can create a blizzard of paperwork and regulations. One of the key attractions of an LLC is that the paperwork is usually simple and the requirements limited. Though regulations governing LLCs vary according to which state it's registered in, there's generally no need for annual meetings, board of director elections and other necessities of more complex business structures.
  
  

Dissolving an LLC

• Once a project run by an LLC is finished, the company can be dissolved and profits split between the members. The manner of dissolution can be written into an agreement with members when they joined and invested their money. It's a simple way to bring the company to a close and allow each of the LLC's members to move on to other endeavors.