“A limited liability company, or LLC, is a U.S. legal entity used to own, operate and protect a business. LLCs provide the same legal and financial protections that corporations do but can be simpler to operate.”
LLCs are flexible and simple legal means to protect your private property if you own a business. They are much simpler to operate while providing the same complex legal protections of a much larger corporation entity. For this reason, many small businesses form an LLC. If you’re thinking of forming an LLC in any state, an experienced Business Lawyer from Beress & Zalkind PLLC can explain how they work and how one can benefit your company.
Limited Liability Company (LLC) – A Legal Business Structure
Here are the top benefits of a limited liability company (LLC) and why you should consider one for your business.
- Limited Personal Liability – As the name implies, your personal liability is limited and your assets are protected from your business in the event things go wrong. Business creditors or those suing your business cannot threaten your personal assets, such as your home or other property. The creditor or suitor can only attack the assets of the LLC or business.
- Less Paperwork – LLCs do require some annual fees and paperwork, but this is minimal, especially compared to the guidelines and restrictions of larger corporations.
- Tax Advantages – This is a major advantage of LLCs: pass-through taxation. The business’ income “passes through” to you and other members and is counted on personal tax returns instead of being taxed as corporate income. You and your members are only taxed once for the income. In other corporate structures, the corporation must pay taxes on its income and shareholders also pay taxes on their share of the dividends.
- Flexible Ownership – LLCs can be owned by a single person, a group of people or a group of entities. Literally anyone can own an LLC.
- Flexible Management – LLCs can be managed by the single owner, by the group of owners or by an appointed manager. Other corporate structures have stringent regulations for management, but an LLC has few rules and can be run however the owners/manager sees fit.
- Flexible Profit Distribution – An LLC allows for flexible profit sharing among the members without all the complex rules of other business models. The owner or manager can control who gets the profits, how much of the profits and when they are distributed.
- Great Vehicle for Holding Assets – The main benefits of an LLC are applied to your property that is owned by the LLC – protection from seizure, lawsuits and pass-through taxation. You are still able to use the assets as the owner of the LLC, but they have an extra layer of legal protection.
- Heightened Credibility – An LLC is a formally recognized business structure that must be registered with the Secretary of State, making it a legitimate entity. This lends greater credibility to your business in the eyes of the public and the business world.
An LLC offers an incredibly simple and adaptable business structure that is especially tailored for small businesses, even sole proprietorships. Other corporate business structures can offer some of the same protections, but LLCs benefit from more flexibility with management, ownership and profit sharing, as well as the limited personal liability and attractive tax benefits. There are also minimal reporting and recordkeeping requirements, making them ideal for small businesses that handle most of their own affairs.
Beress & Zalkind PLLC is a Business Law Firm that can help you form and maintain an LLC for your small business. We can also provide sound advice and legal services for your other business needs. Contact us today and ask about forming an LLC for your company.