Benefits of an LLC?
When starting your own business, one of the first things you should consider (after the type of business and its name), is the business structure. How should you approach the business incorporation? One of the most popular methods today is a Limited Liability Company (LLC). Often mistaken for a corporation, the “C” in LLC stands for company, not corporation. In the most basic sense, LLC formation allows small businesses to reap corporate-type benefits while avoiding some of the negative aspects of big corporations. The formation of LLCs is a relatively new way of doing business and has become extremely popular during the past 10 years for several reasons. • Flexibility: When you form an LLC, you can have one or many owners, called members, giving you the flexibility to run your business solo or in partnership with other individuals. • Reduced Taxes: In a traditional corporation, the corporation is first taxed by the government. Once this is done, the owners of the corporation are then taxed. In a Limited Liability Company, the company itself is not required to file a state or federal tax return; it’s the members who must file individual 1065 tax forms. Therefore, the LLC allows its members to avoid double taxation. • Asset Protection: LLC’s limit the personal liability of its members. In simplistic terms, that means if someone wants to sue your company, they can only sue the company itself, not you personally. For example, the personal assets of any LLC member—whether it is their home, car, fine art or life savings—are protected in the event someone tries to sue the company or any of its members. Or, if the LLC takes out a loan from the bank to purchase new equipment and then finds itself unable to repay it; the lender cannot personally sue the members in order to recoup their monies. • Credibility: Many small companies choose to form Limited Liability Companies because this business structure gives them instant credibility. Having an official corporate status makes it easier for LLC’s to raise capital and market themselves in today’s competitive environment. • Less is More: Traditional companies have shareholders who must meet a certain number of times each year in order to make decisions. Limited Liability Companies do not have shareholders and are not required to hold meetings in order to move the business forward. Therefore, there is less red tape, paperwork and expense required to run the business. Let the professionals at Your Entity Solution explain the many benefits you can realize from the formation of LLC. They will listen to your ideas for your business, then help you find just the right solutions to accomplish your goals and make your LLC formation legally sound and viable today and for future generations.