An LLC is a Great Business Structure For Most Small Companies
A limited liability company, or LLC, is easiest described as being a hybrid between a corporation and a partnership. To put it simply, limited liability company offers many of the benefits of a corporation without all of the formalities usually associated with a corporation.
The multiple owners, called members, of an LLC get looked upon as a partnership when it comes to taxes. The LLC passes through income taxes directly to its owners, so, unlike a corporation, the LLC itself never pays taxes.
An LLC does not suffer from the double-taxation problem that a corporate structure faces. To simplify this, because the tax obligation is put on only the owners, income is only taxed once. Though, a limited liability company is still obligated to pay state (if applicable) and federal payroll taxes.
At the time of form an LLC, a decision is made about how you choose the tax treatment desired. You can handle income taxes as if you were a sole proprietor, a C corporation, or an S corporation. The great thing about an LLC is that you get to decide how to handle paying taxes.
Assuming that the LLC is set up correctly, and personal and business activities are kept completely separate, the members are afforded personal liability protection. This is a big reason why people choose to form an LLC instead of running a business as a sole proprietor. Also, a business generally earns more reverence when it has a formal structure, such as an LLC.
Form an LLC is done by someone who does not necessarily have to be an owner. You can actually use an online company to create your LLC for a very reasonable charge, which means you are assured that everything is set up correctly.
A member’s monetary liability is limited to the financial contribution made by that member. When you are operating as an LLC, you can bring in more than one partners, who can be active in the company, or just contribute money.
While a limited liability company is similar in structure to a corporation, it allows more flexibility to its owners. Creating an LLC with an incorporating online company works best smaller companies in which there doesn’t have to be too many owners.
In the US, the LLC is a relatively new business entity. As a matter of fact, as early as 1986, limited liability companies were only allowed in two states. Today, every state recognizes this business structure.
