Starting a new business comes with the struggle of making decisions about your business structure. Entrepreneurs are often stuck between choosing LLC Filing, Limited Partnership, Sole Proprietorship, and other business organizations. Selecting a business structure has an impact on your business longevity. Your business reputation, personal tax situation, legal actions, your liability for debts and legal action, and others will also be affected by the choices you make to formalize your company. This is where LLC Filing companies enter the picture. Limited Liability Company is a business structure where members are not liable for the company’s liabilities or debt. It is considered easy, the most flexible and effective business structure to create by experts. LLC Registration is a popular choice for small business owners because of its liability protection, cost of registration, taxation, and management flexibility. Understanding the benefits of LLC is essential for business success. Read on as Global Multi Services gives us information that will help you determine if an LLC is right for your business.
Benefits of LLC Filing
Here are the benefits of LLC Filing for your business
Management and Ownership Flexibility
Limited Liability Company has enormous flexibility when it comes to management and ownership. They also have no restrictions when it comes to the members they can have. LLC can choose to be member-managed or manager-managed. That is, members can share the responsibilities of the day-to-day operation of the business or designate one or more managers to run the business. The manager can be a member of the LLC, a non-member.
Personal Liability Protection
LLC provides its members personal liability protection. That is, owners are not personally responsible for any debt or business-related lawsuit incurred by the company. Creditors can only file lawsuits against the LLC and cannot collect any personal assets of the members. These include personal accounts, personal properties, and many more.
LLC Filing companies benefit from pass-through taxation because they are not taxed as a business entity which means members avoid double taxation. The profits and losses incurred by the company pass through the business to the member’s tax return and are taxed at their rates. Singled-member LLCs are taxed the same as sole proprietorships, while two or more members are taxed as a partnership business structure.
Disadvantages of LLC Filing
Here are the disadvantages of LLC Filing
Expensive to setup
An LLC is generally expensive to form and maintain when compared to a sole proprietor or a partnership. States charge an initial LLC Filing fee, and many states also impose ongoing fees such as annual reports, franchise tax fees, and many more. LLC Filing Companies also have a written agreement laying out how the LLC will be governed.
Transfer of ownership in LLC is often hard as all the members must approve adding new members or altering the ownership percentages of existing members. Unlike corporations, where the company can sell shares of stock to increase its ownership.