Posts Tagged C Corporation

LLC Formation is a Great Idea Under Most Circumstances

The business structure know as an LLC can be best considered to be a hybrid between a corporation and a partnership. Simply explained, limited liability company give a business many of the benefits of a corporate structure without all of the protocols usually associated with a corporation.

The multiple owners, called members, of an LLC are treated like a partnership for tax purposes. It is a pass-thru tax structure, so income taxes are paid by its owners, so, unlike a corporation, the LLC itself never pays income tax.

An LLC never worries about the double-taxation problem that a corporation does. To simplify this, due to the fact that the tax obligation is passed on directly to the owners, income tax is paid just one time. Though, an LLC must still pay state (if applicable) and federal payroll taxes.

At the time of form an LLC, you choose how to handle income taxes. You have the choice to be taxed like a sole proprietor, a C corporation, or an S corporation. The choice is yours.

Assuming that the LLC is properly set up, and personal and business activities are kept completely separate, the owners are afforded personal liability protection. This is a big reason why people choose to form an LLC instead of operating as a sole proprietor. You should also consider that a company generally earns more respect when it has a formal business structure, such as a limited liability company.

LLC formation is performed by a person who does not necessarily have to be a member. There are actually several very reputable online companies that will form your LLC for a very reasonable cost, which means you are assured that everything is set up correctly.

A member’s monetary liability is limited to the amount of money contributed by that member. When you are operating as an LLC, you can bring in more than one partners, who can either be actively involved in the company, or serve as silent investors.

An LLC is a business structure that is very very much like a corporation, but offers member more flexibility. Forming an LLC with an LLC online company is most suitable for smaller companies in which there doesn’t have to be too many owners.

The LLC is a relatively new form of business structure, at least in the United States. As a matter of fact, as early as 1986, limited liability companies were only allowed in two states. Today, every state recognizes this business structure.

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