Exploring The Most Notable Benefits Of An LLC
Are you interested in starting your own business? If so, you may want to consider establishing your business as an LLC, or limited liability company. Although this may not be a necessity for all small businesses, it can be very beneficial in some regards. Within this comprehensive guide, you will learn about the most notable benefits of an LLC.
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As the name suggests, companies, which have obtained LLC status, will be afforded limited liability. Although these companies can still be put at risk, the risks are dramatically reduced, when compared to other types of businesses. In this type of situation, the investor is unable to lose more than the amount that they initially invested.
Even if your LLC goes under, you will never have to worry about losing your personal assets or your home. This is undeniably the biggest reason that LLCs have become so popular over the years.
Management Structure Freedom
LLC status provides the business owner with added freedom, since it allows them to setup any type of management structure they desire. This is not the case with corporations, since they must have a board of directors, which will be in charge of the business’s biggest decisions.
With an LLC, the company can run their business in any way they wish and the owners or managers can maintain in complete control. Also, LLCs can appoint anyone as an owner and they can have as many owners as they desire. This is not true, with S corporations.
One of the most pertinent benefits associated with the LLC is the pass-through taxation. LLCs are not generally required to pay taxes. Instead, the taxes are actually passed along to the owners, who are responsible for reporting the income on their personal tax returns.
This helps to ensure that the taxes are paid on the individual level and can help to keep the taxes to a minimum.
As an LLC, your credibility rating will be very high. Not only will other corporations see you in a different light, but also the consumer will choose your business to deal with over the competitor.
While there are unlimited benefits of LLC, there are also just as many disadvantages. If at any time the partnership agrees to sell more than 50% of the company’s profit interest and capital, within a 12-month time frame, there is the risk of losing their federal tax exemption. This is only the tip of the iceberg and if you are interested in starting a LLC, you will need to dig deeper to find all of the disadvantages.
Although not all businesses will opt for an LLC, doing so can be incredibly wise. Above, you have discovered some of the most notable benefits associated with obtaining limited liability status for your company.