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Limited Liability Companies
There are many different kinds of businesses structures to choose from. Corporations, Sole Proprietorships, and Limited Liability Companies are some of the most popular business structures. Limited Liability Companies are the most popular business entity, with millions of them now throughout the US. Learning about this business structure can be a little confusing, but after reading, you should have no problems understanding.
A Limited Liability Company (LLC) is like many other business entities, but also has many different characteristics. An LLC is not a corporation. An LLC can operate similar to a sole proprietorship or partnership, depending on the amount of owners, while maintaining liability protection characteristics from corporations.
Owners of LLCs operate under limited liability. This means that the owner(s) generally cannot be held personally liable for the debts of the business unless they choose to do so. . However, even though a business has limited liability for its owners, the the owner(s) must maintain “corporate formalities,” meaning the owner(s) must keep the company’s assets separate from personal assets and keep the company actively registered with the State.
Another popular reason many owners decide to start an LLC is due to the tax liability. LLCs are offered a choice with what forms to use, depending on the amount of owners, and are also offered a select few tax advantages. The forms are of great flexibility, and they can to be “labeled” as a partnership, sole proprietorship, C Corporation or even an S corporation under certain circumstances. However, some disadvantages with LLCs include an extra tax in some states. Check with your State Treasury Office to see if it has any specific taxes on LLCs.
It is vital to understand that as a business owner, you have many decisions to make. It is smart to research as much as possible and provide the best means for your business. LLCs may offer a significant amount of advantages if structured properly. If you were thinking of running a business, Setup Express can help you start your LLC and provide the necessary guidance and information.