The Benefits of LLC
It’s no secret today that most small business owners choose an LLC as the business entity for their company. The benefits of LLC are quite simple really considering multiple factors the primary factor in forming a limited liability company is the middle will cost and effort to maintain involved with forming an LLC. So what are the benefits of an LLC to a small business owner? get a “doing business as” (DBA) registered in
Minimal expense, LLC’s can easily be formed privately by simply finding template articles of organization and inserting your company information. This truly takes about 15 minutes to complete.
LLC Operating Agreement
These business entities consist of articles O. organization, and if you are planning to have a partnership or have multiple members, it is recommended to develop and LLC operating agreement that will govern the business operations. Partnerships often fail and this operating agreement will become the deciding and determining factor in any disputes or legal action that does take place. The nice thing about having an operating agreement in place as it many times can prevent legal action against the partners because terms of the arrangement are clearly spelled out in the operating agreement in most cases.
Excellent liability protection. These business entities will certainly protect a business owner against anyone who is trying to sue them personally. Give you sign properly and operate in behalf of the company, signing as its managing member, or its member, you will have no problems in a lawsuit. This does however a so that you are operating your bank account as a business and not injecting your personal expenses in your business account. The courts will look at how you run the business and does it operate on its own accord. If the business stands on its own 2 feet, has its own bills and expenses that are separate from your personal, and assuming that you have not lapsed your company records with the state, you will be fine in protecting yourself against any liability. This also assumes that you did not commit fraud, these entities do not protect against fraud in the event you are faced with a lawsuit, if the opposing party can prove fraud they will easily penetrate the corporate veil.
LLC taxation is certainly different from corporate tax. Using an LLC S corp. strategy will help minimize or completely ovoid self-employment tax. You will have available to you all of the common business tax write-offs. However, you will not be able to avoid self-employment tax if you operate strictly under the business entity for your company. It is recommended that you seek out an accountant and understand a corporate structure that can minimize self-employment tax. An example of this will be using an S. corporation to pay you from your limited liability company. There is plenty of LLC information that you can find regarding taxes on the Internet. Various strategies change year-to-year what the idea of avoiding self-employment tax is most appealing to business owners. Becoming an employee of your own Corp. is the strategy that most use, and having your LLC paid us a Corp. is what’s more, and in structures today. Paying a small salary too yourself, while paying high dividends further minimizes overall tax. These strategies can be quite complex and do require extensive research and a good CPA to execute.
Limited Liability Company
In the early stages of forming your business, it is okay to simply start with your LLC and operate and as you earn more revenue than seek out an accountant to add an S. corporation to the equation. Forming a Corporation typically is more expensive at the state level, and has more rules and regulations to follow to maintain your compliance and corporate veil.