Tag: llc

Top Advantages of Having an LLC

Top Advantages of Having an LLC

It is crucial to understand that the legal structure impacts how you pay taxes, make decisions and receive income. If you decide to start a new business, you need to note various options you need to consider.

A limited liability company is a type of business that shares specific characteristics with both corporations and partnerships. In other words, when you structure your business as an LLC, there are various benefits you will get. It is advisable to ensure you understand how to run this type of business before forming it. Here are the benefits of having an LLC.

Limited Personal Liability

business consultantOne of the reasons why most entrepreneurs go for limited liability companies is that they have limited liability for their decisions. If the business is sued or owes debts, the owners should not pay for the debts.

In this case, it is essential to understand that the partnership and sole proprietors are liable for all business debts. That is why you need to know that members of LLCs and other corporations are well-protected from these business debts.

Membership Flexibility

business consultingWhen you want to start an LLC, you need to know that it has a flexible membership structure. When comparing it with corporations, you will note that there are various benefits you will get. Corporations will not have more than a hundred shareholders. Also, it is vital to note that they cannot include foreign shareholders, and they cannot contain shareholders that are corporations. However, LLC does not offer flexibility when it comes to the type of owners they can have.

Flexible Profit Distributions

business servicesAnother reason why most entrepreneurs are going for limited liability companies is due to flexible profit distributions. Before creating it, you should understand that they have flexibility in the way they distribute profits. However, it is essential to note that they do not distribute them equally or depending on the ownership percentages.

Less Paperwork

When you plan on creating an LLC, you should understand that there is less paperwork. When comparing them with corporations, you will note that they do not hold annual shareholders meetings, so there is less paperwork. Also, it is essential to understand that they do not have recordkeeping requirements. Moreover, they are not entitled to file annual reports.…

Pros and Cons of Limited Liability Companies

Pros and Cons of Limited Liability Companies

If you are a sole proprietor and desire to take your business to the next level, forming a limited liability company is the best option. It will allow you to raise capital and still run your business as your own and see it flourish. Running an LLC like any other business has its pros and cons too, and as an entrepreneur, it is paramount to know beforehand what you are getting into. However, an LLC has more benefits than downsides. The good news is you can form an LLC without so much hassle by hiring a formation service.

Below are the pros and cons of starting an LLC:


Limited Liability for Members

Limited liability protects members from being held personally liable due to company actions and moves. This means that shareholders and the LLC are separate entities, so their personal properties are protected. For example, when a creditor is collecting company debts or when the company has a lawsuit against it, the members’ assets are safe.

Fewer Formalities

less paperworkUnlike corporations, which are required by law to hold meetings and regularly document every discussed issue, the law is lenient on LLC. The LLC law does not require a regular meeting with members, neither does it press on documentation of minutes discussed.This reduces paperwork and allows easier business running since there is no much consultation needed as long as you abide by law and agreement when carrying out business.

No Limitations on Membership

There are no limitations on the number of members; you can have more than 100 members on your members’ board. Shareholders can be citizens or non-citizen of the United States. Corporations require shareholders to be not more than 100 and must be natural citizens of the US. The law also allows shareholders of an LLC to place interest in a trust.

Enjoy Flexible Taxation

flexible taxationAn LLC allows its members to enjoy profits without being taxed by the government as a corporation. Members receive tax-free profit from the LLC and only pay tax individually.


Members May Carry Other Members’ Burdens

Most states require the LLC to be dissolved if a member dies or declares bankruptcy. Even though the LLC can still run but this is after dissolution and starting afresh with new regulations.

Limited Liability Protection May Be Overturned

A court can overturn the limited liability protection, and members declared liable for LLC’s action. This normally happens if you don’t separate business from personal transactions.…