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Are you planning to apply for a Limited Liability Company (LLC) structure for your business? This is a common and useful legal structure for many business types. However, it isn’t the right choice for every situation. Before you start your application, read the following five facts.
1. Limited Liability:
Perhaps the most significant characteristics of an LLC, and the reason many business owners choose it, is that it limits the liability of its owner(s). Members are typically only liable for company debts to the extent of their investment. This keeps their personal assets protected.
2. Pass-Through Taxation:
Limited Liability Companies with multiple members may elect to be taxed as a corporation or as a partnership. In the case of the latter, taxes are passed through to members, avoiding the double taxation of corporations. This can be a simpler and less expensive option for many business types but does not fit every situation.
3. Flexible Structures:
LLCs can have flexible operating structures. The requirements are much simpler than for corporations. Depending on the size and purpose of your business, this may or may not be advantageous.
4. Business Credit:
As a separate entity, your LLC will have its own credit. This means that you can avoid personal liability and take on debt as an organization rather than as an individual.
5. It’s Easy:
One of the best parts of the LLC structure is that it is easy to establish. Especially with LLC online filing services, creating one takes only a few steps. All you need to do is pick your name, choose how you will be organized, file the paperwork with the state and create an operating agreement between the owners.