The Benefits Of Forming An LLC

Many small business owners have begun to consider legal structure and the most popular legal entity that small business owners are choosing is the LLC or Limited Liability Company. An LLC offers a number of benefits from asset protection and tax perspectives. There are a number of things however that one should keep in mind when choosing to form an LLC.

An LLC has members who run the company or leave it to be run by a group of chosen managers. This is often a beneficial entity for those who want to use their business to purchase certain assets like real estate or other securities. Those who have the versatility to disperse their earnings and losses among members may also find forming an LLC to be beneficial.
An LLC ensures that profits and losses from the business circulate through to individual tax returns for the members of owners. This helps to prevent double taxation which is often found in corporations. You can also use the LLC to protect yourself and other members from lawsuit judgements which could take your assets. Small business owners are liable for judgements where as LLC members are limited in their liability for certain actions taken against the business.

The LLC is very popular among real estate investors and those who hold investment properties. There are a number of tax benefits that go along with forming an LLC, as well. Most choose to form an LLC based on the tax benefits and the legal protections alone. In many states, lenders to LLCs cannot take the ownership interest of the members, even for debts incurred after the LLC was formed. The assets owned by each member remain safe from legal action. Of course, there are drawbacks of forming an LLC, but most small business owners feel that the benefits outweigh the disadvantages. Those considering the formation of an LLC who are not sure if the benefits are worth the effort should speak with a qualified business consultant prior to the formation. Some may feel that forming a corporation is a much better choice, depending on the specific goals of the small business in question.

About admin