Benefits of Starting a Limited Liability Company
Benefits of Starting a Limited Liability Company
LLCs offer many benefits to owners of small businesses. In addition to being easy to form, limited liability companies do not need much paperwork with your initial filing. A special component of LLCs is limited liability; the owners (referred to as "members") should not in most cases be personally responsible for the debts of the company assets are safe when the limited liability company owes money.
LLCs exist in a unique nexus of sole proprietorships, partnerships, and corporations, and assume the biggest benefits of each. The limited liability company entity is less defined and provides increased flexibility when compared to a corporation but still gives the same liability protection. Also, LLCs obtain the identical tax simplicity afforded to sole proprietorships and partnerships but have increased professionalism as a result of being an official business entity.
You can elect to have your limited liability company taxed as a sole proprietorship, partnership, or S-Corporation. This decision usually turns on the amount of owners your limited liability company has. Always, LLCs receive the benefit of pass-through taxation. This avoids the negative of corporate double taxation in which pay income tax on its income and then pay additional taxes on its payments to owners. LLCs in comparison only pay tax once: on the members' own personal taxes.
There is not a guideline on the number of owners you may hire in your limited liability company and there is no guideline on who may be a owner. Your personal interest in the limited liability company is usually freely transferrable unless encumbered by the limited liability company's operating agreement and the limited liability company will continue to exist in perpetuity so long as there is another member able to take your position.
Though the limited liability company is a more novel type of business, it was created with the requirements of smaller business owners at heart. A competent business attorney can analyze your business and ensure that a limited liability company is correct for you.
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