There are various legal structures of business that you can have. One of these is a limited liability company or LLC, which many entrepreneurs consider worth adopting.
But do you know why an LLC is the best option for your business structure? Check out the different characteristics of an LLC below and see if it’s ideal for you.
What is LLC?
A limited liability company is a business structure in which business owners, also known as members, enjoy personal liability protection.
This means that individual assets are not used to recover the business in the event of loss. LLCs are usually handled by the state and also follow certain rules.
In addition, LLC registration requires the filing of the organization’s articles of incorporation, which is a fee. Fees vary by state. for example, Washington LLC Cost $180 to $200, depending on how you submit by mail or online.
Attributes of an LLC
As a business structure, an LLC has various characteristics that make it stand out among all systems. Take a look below to understand why an LLC is the ideal business structure.
1. Limited Liability
Limited liability protection is the main advantage of an LLC. Usually in other business systems each member is always accountable to the other team her member, which is very cumbersome.
With an LLC, you are only responsible for your actions and all personal assets such as your car and home are not at risk if your business suffers a loss.
2. Separate legal identities
Given the fact that LLCs offer limited liability protection, it also means that LLCs operate as separate legal entities from their members.
However, you can enter into agreements and conduct transactions using your own name. If there is an unincorporated union, the members of the union are liable as a collective and can continue even if some members leave.
3. Flexible taxation
The LLC business structure gives you freedom as to how you are taxed. But the first thing you need to do is file your LLC tax. It can be declared as a single-member company or as a multi-member LLC.
Similarly, you can also submit and obtain either S-Corporation or C-Corporation. Since the IRS does not consider LLCs to be separate taxable entities, taxes will be correctly incurred.
4. Easy organization and operation
When it comes to forming and running a company, you can enjoy the simplicity of an LLC. Submitting the required documents is easy. Apart from the Articles of Incorporation of the organization, a contract must be filed that defines the ownership and obligations and responsibilities of the individuals that make up the company.
Annual meetings and minutes are not required in some states, making it more convenient for members.
Similarly, unlike corporations that should have a strict record keeping system, simple record keeping is sufficient under the LLC system.
Additionally, limited liability companies can hire a virtual business address service to streamline their business email. . It’s convenient for LLCs because all emails are safe and secure.
with LLC virtual address, the email is sent to a remote email facility and uploaded for online viewing and management. As a result, the LLC can organize important emails/communications and make the process seamless.
5. Control
Unlike legal entities, it can be the sole owner with full management control. If there are multiple owners, under the operating agreement, everyone can define and configure management in any way they choose.
Another nice thing about forming an LLC is that you are not liable to the board of directors or anyone else. That means more freedom to make important business decisions.
6. Flexible Profit Sharing
different business structure There are various profit sharing requirements. The corporation pays dividends according to each shareholder’s percentage of ownership. In a partnership, profits are split equally between the partners.
A limited liability company, on the other hand, allows the owner/owner to provide a profit sharing plan in the operating contract. For example, one owner may receive more profits while others may receive less. This is sometimes done when one owner has more responsibility in running the business than another.
summary
Upon closer inspection, a limited liability company has more favorable attributes than any other business structure when it comes to liability.
Liability protection is one of the great features of this system. This is why an entrepreneur prefers to use his LLC in a business, especially a startup. Besides, at the end of the day, everyone wants to keep their personal assets safe and separate from their business.
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author: Joyce Velasco
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