A limited liability company (LLC) is a type of business in the U.S. that offers limited protection through taxation. An LLC is legally separate from its owners. In this way, owners are not held personally liable for the debts accrued throughout the business. Limited liability companies (LLCs) are hybrid entities that combine a corporation's characteristics with those of a sole proprietorship or partnership.

Why An LLC Is The Best Choice? 

• The main benefit of forming an LLC is protecting personal assets by limiting the liability to the business's resources.

• In most cases, forming an LLC will protect your assets from claims and lawsuits against the business.

Benefits Of An LLC Business Structure

Here are six main benefits that come with forming an LLC:

1. Tax Flexibility
Limited liability companies (LLCs) are treated as a pass-through entity for tax purposes, like sole proprietorship or partnership. It means that LLCs avoid double taxation.

An LLC owner is not required to pay unemployment insurance taxes on their salary. However, an LLC can choose to be treated as a corporation for tax purposes, such as a C corporation or S corporation.

2. Limited Personal Liability
Limited liability companies are protected from any personal liability based upon things that the business performs. It ensures that creditors cannot go after your personal assets, such as your home or savings, based on liabilities that the business accrues.

It is better than sole proprietors, who can have their assets garnished to pay off debts accrued throughout the business.

3. Fewer Corporate Formalities
Corporations are required to:

• Keep written corporate minutes.
• File annual reports with the state.
• Hold regular meetings of the board of directors and shareholders.

On the other hand, the members and managers of a limited liability company (LLC) do not have to hold regular meetings, which reduces the complications and paperwork.

4. Flexible Membership Agreements
According to business law, members of an LLC may include:

• Partnerships
• Trusts
• Individuals

There is no legal limit to the number of members of an LLC. Compare this to S corporations or corporations taxed under Subchapter S of the Internal Revenue Code (IRC), which have a strictly limited number of shareholders who can join. In most cases, it is a tangible benefit to be gained.

5. More Management Operations

When you choose an LLC, you have more than one management operation. Other business structures, such as corporations, are managed by a board of directors. The use of an LLC ultimately simplifies the business.

6. Increased Credibility For The Business

Sometimes, clients are hesitant to trust the contractors. One of the main benefits of forming an LLC is to give clients a better first impression of your business. Limited liability companies help businesses to build their credibility.

Takeaway

Limited liability companies (LLCs) have several major benefits. However, depending on the type of business you want to run, you should consider as many business structures as currently available, including S-Corporations and others.

Generally, there are more benefits to forming an LLC than not. If you are looking to start a business, an attorney can help decide what legal structure is the right choice for you.

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