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Reasons Why You Should Register Your Business as an LLC

The most popular forms of business among most entrepreneurs are sole proprietorships, partnerships and corporations. Another interesting business form is usually not exploited. The limited Liability Company is an often-neglected business structure. There are many business forms that would best work with the Limited Liability structure but are set up as other forms of business. A key point about the LLC is the fact that it has features of both a partnership and a corporation. This is something useful but regularly ignored. It will offer the advantages of the other two forms of businesses. Below are some advantages of the LLC structure.

A LLC offers a limited liability that stands out than other business forms. The business owners within this structure are called members. Every member with the LLC is able to operate separately as a provision of the liability within an LLC. The members are therefore not held responsible at a personal level for any debts or decisions that the company makes unless personal guarantees had been made. A good instance would be if the company runs bankrupt no member shall be held responsible by clients or suppliers on a personal level. Even if the member can settle the debts personally, they are not legally obliged to do so.

The tax models available with this business structure are very attractive. Unlike all other corporations, the LLC is not exclusively liable to corporate tax. The pass capability allows LLCs the decision not to pay corporate tax. Members are entitled to the profits as well as the losses of the company but they are obligated to post this figures in their respective tax returns. It is the members who decide which tax system they go for. LLC members can also decide to opt for corporate tax if they feel it would be ideal.

LLCs have freedom of distribution company profits and the losses as well in any way possible. This is different from a partnership where the distribution of profits and losses is done based on the percentage of ownership or investment. With LLCs any agreed upon method would work. An LLC does not have many requirements for startup. The LLC method can be used by a group of members or by a single entrepreneur since there are different types of LLCs that you can form.

Another great advantage of the LLC is the unlimited number of members that can form a single Limited Liability Company. The tax benefits of an LLC are much better compared to other forms. With the different tax climates, an LLC will offer you range of choice on how to file your return the best way.

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