The Benefits of an LLC

Entrepreneurs can enjoy many benefits from an LLC or limited liability company business structure. Businesses that take the LLC route have to complete the process through the state. This goes to say that the rules and fees included in incorporating vary. You are guaranteed the benefits of being consistent though. Some companies like can help you set up an LLC without difficulty.

Protection from personal liability

Among the primary benefits of setting up an LLC is that your personal assets are separated from your business. This means that your home, savings, and car are safe if ever your business defaults on a loan or is sued. An exception for this is when you sign a personal guarantee for financing your business. This gives the creditors the right to make you accountable for repaying the debt. Moreover, in a lawsuit, you may also be held responsible if there is any evidence of fraud or negligence, harming those involved.

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Flexible taxation

Picking the LLC as a type of entity allows you several options on how you can pay taxes. LLCs don’t pay corporate taxes unless it chooses to be taxed. Normally, LLCs pass profits through to their owners as personal income. This process is known as pass-through taxation. This setup allows for savings as it avoids double taxation which is at the corporate and personal levels.

Flexibility in management and ownership

The LLC business arrangement lets the members determine the way their profits are to be shared. This makes the LLC different from a general partnership, which requires all the profit to be shared by the partners equally. This LLC service is offered online by LLCs also allow profits to be shared based on the agreed terms. A member who has invested more money upfront or added more sweat equity may have a larger share of the profits. An LLC has no limits on the number of owners.

Inexpensive and easy to form

When you compare it to setting up corporations, an LLC is less expensive and quite easy to create. It usually costs less than $1,000. The exact process of forming an LLC depends on the state where you are establishing it. The paperwork involved as well as the cost is minimal. You have to fill out a short formation document and file the articles for organization as well as an operating agreement. This is what outlines the ownership structure of the newly formed company.