Why choose an LLC?
LLC (Limited Liability Company) provides limited liability protection to their owners (called members). Typically, owners are not personally responsible for business debts and liabilities of the limited liability company so creditors cannot pursue owners’ personal assets to pay business debts.
Advantages of an LLC
Business owners stand to gain many benefits when they register a company as an LLC. These benefits are, in many cases, unavailable to sole proprietorships and general partnerships. Creating an LLC typically provides the business owner with the following advantages:
- Limited liability protection. Owners are not held personally responsible for business debts and liabilities.
- Pass-through taxation. Typically an LLC does not pay taxes at the business level. Income/loss is reported on the owners’ personal tax returns and any tax due is paid at the individual level.
- Flexibility in allocating profits among owners. LLCs offer owners flexibility in allocating profits and losses among its various owners.
- No ownership restrictions. LLC ownership is not limited to “100” owners the way an S corporation is. LLCs typically have no or very few ownership restrictions imposed.
- Flexible management. Limited liability company owners have flexibility in structuring company management.
- Different membership classes. LLCs are not limited to one class of ownership, the way S corps are. LLCs can have different membership classes.
- Fewer ongoing formalities. LLCs have less annual paperwork than, and do not face the meeting requirements imposed on C corporations and S corporations.
- Credibility. Forming an llc may help your business be perceived as a more legitimate business than a sole proprietorship or general partnership.
- Consent to add owners. Written consent of LLC members must be obtained prior to increasing ownership in the company or adding new owners.
Forming an LLC?
To form an LLC, Articles of Organization must be filed with the state and the applicable filing fees paid. With our incorporation service packages, BizFilings handles the whole process for you, making starting an LLC quick, easy and simple.
LLCs provide limited liability protection to their owners, like corporations, so owners are typically not personally responsible for business debts and liabilities. They also provide pass-through taxation, like partnerships, LLC income is reported on the owners’ personal tax returns and any tax due is paid at the individual level. Business Type Comparison Table