Benefits
LLC's many advantages are why they are becoming the most
popular form of company
Limited Liability
Liability protection is an LLC’s most important advantage. Without a company structure, your liability for your business is unlimited. All your personal assets, such as your house, savings, and personal property are at risk. How? If your business ever suffers financial difficulties, creditors can seize your home, savings and other assets to satisfy the debts of your business. If you are sued, it’s the same story: all you assets are at risk.
LLC’s offer “Limited Liability”. Put simply, this means you can lose no more than the amount you have invested in your company. Forming an LLC distinguishes between your business and your personal activities, helping protect your personal assets. The business is conducted by the LLC, not you. Only the LLC’s assets are available to creditors or to satisfy lawsuits.
Other Benefits
Tax Savings. If you operate as a sole proprietor, you pay self-employment tax on your profit, currently 15.3%. If you run business as an LLC, only the salary you pay yourself is subject to self-employment tax. If you own but do not actively manage your business, you may not have to pay yourself any salary, which can lead to even more savings.
LLC's avoids “double taxation”. An LLC does not pay taxes. Rather, the income is “passed-thru” to the owners, and reported on their tax returns. However, a corporation does pay taxes. With the money left after taxes, it can pay you dividends. However, you have to report the dividends on your tax return and pay even more taxes on the same income. This is “double taxation” and no one likes it.
Why deal with the IRS more than needed? Sole proprietors are audited 4 times more often than business, based on 2006 returns. Need we say more?
Present a Professional Identity. Increase your credibility with clients and suppliers. Adding "LLC" after your business name increases your credibility and professionalism to customers. LLCs often experience greater ease in doing business. Many stores and banks favor corporate accounts and offer discounts.
Ease in Transferring Assets. LLCs can be perpetual. If an LLC owner dies, their portion of the business can be transferred quickly without interrupting the company’s operations. Estate and family planning is may be simplified since ownership in the LLC can be easily distributed to family members.
Minimal legal maintenance. LLC are designed by state laws to have fewer annual requirements and ongoing formalities than corporations.
Organizational Structure. LLCs can establish any organizational structure the owners want.
Few Ownership Restrictions. Unlike S-Corporations, there are few restrictions on who can own an LLC. For example, other companies, including LLC's, can own an LLC. Even non-US residents and Trust's can own all or part of an LLC.
Limited Liability
Liability protection is an LLC’s most important advantage. Without a company structure, your liability for your business is unlimited. All your personal assets, such as your house, savings, and personal property are at risk. How? If your business ever suffers financial difficulties, creditors can seize your home, savings and other assets to satisfy the debts of your business. If you are sued, it’s the same story: all you assets are at risk.
LLC’s offer “Limited Liability”. Put simply, this means you can lose no more than the amount you have invested in your company. Forming an LLC distinguishes between your business and your personal activities, helping protect your personal assets. The business is conducted by the LLC, not you. Only the LLC’s assets are available to creditors or to satisfy lawsuits.
Other Benefits
Tax Savings. If you operate as a sole proprietor, you pay self-employment tax on your profit, currently 15.3%. If you run business as an LLC, only the salary you pay yourself is subject to self-employment tax. If you own but do not actively manage your business, you may not have to pay yourself any salary, which can lead to even more savings.
LLC's avoids “double taxation”. An LLC does not pay taxes. Rather, the income is “passed-thru” to the owners, and reported on their tax returns. However, a corporation does pay taxes. With the money left after taxes, it can pay you dividends. However, you have to report the dividends on your tax return and pay even more taxes on the same income. This is “double taxation” and no one likes it.
Why deal with the IRS more than needed? Sole proprietors are audited 4 times more often than business, based on 2006 returns. Need we say more?
Present a Professional Identity. Increase your credibility with clients and suppliers. Adding "LLC" after your business name increases your credibility and professionalism to customers. LLCs often experience greater ease in doing business. Many stores and banks favor corporate accounts and offer discounts.
Ease in Transferring Assets. LLCs can be perpetual. If an LLC owner dies, their portion of the business can be transferred quickly without interrupting the company’s operations. Estate and family planning is may be simplified since ownership in the LLC can be easily distributed to family members.
Minimal legal maintenance. LLC are designed by state laws to have fewer annual requirements and ongoing formalities than corporations.
Organizational Structure. LLCs can establish any organizational structure the owners want.
Few Ownership Restrictions. Unlike S-Corporations, there are few restrictions on who can own an LLC. For example, other companies, including LLC's, can own an LLC. Even non-US residents and Trust's can own all or part of an LLC.
