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LLC Benefits as a Business Entity
Last updated Sunday, April 7, 2024
An LLC
gives you the benefits of a corporation without all of the hassles. LLCs are popular
because they are not only very easy to form, but they are also easy to run.
They make taxes much more streamlined, and they have limited liability for
owners too. By some estimates, there are roughly 21.6 million LLCs in
the United States. In comparison, there are approximately 1.7 million
traditional C-Corporations. There are another roughly 23 million sole
proprietorships as well. Some of the most important benefits are
outlined below.
·
Limited personal liability
An LLC is a separate legal entity. It can hold
real estate, create contracts, get sued, and take on debt, just like you can as
an individual. It can also be legally liable for certain obligations and
commitments.
Like
a corporation, an LLC insulates the owners of the company from business
liabilities. If the company cannot pay a debt or it gets sued, the owners’
personal assets are not at risk. Instead, liability is limited to whatever
assets the company may have.
To
take full advantage of limited liability, be sure that you keep the LLC’s
books, records, and bank accounts separate from your private accounts. Ensuring
that your company acts like a company will help address any challenges to
extending liability for the LLC.
·
Tax advantages
Although an LLC is a separate legal entity, it
is not a separate entity for tax purposes. There is no separate tax
classification for an LLC. Instead, it adopts the tax status of whichever
entity it would like—including a sole proprietorship, partnership, S-Corp, or
C-Corp. This flexibility allows the company owners to decide which tax status
will be the most advantageous for their situation.
·
Less paperwork
An LLC does not have to meet the specific
requirements regarding filing that a corporation must use under state law. Holding
meetings, creating annual reports, and paying annual fees are all pretty common
for a corporation. But an LLC can often avoid these time-consuming
requirements. Forming an LLC is often a much easier process as well.
·
Ownership and management flexibility
An S-Corporation has the benefit of
pass-through taxation, but it cannot have more than 100 shareholders, and they
cannot have foreign shareholders or shareholders that are corporations. LLCs do
not have those same restrictions—and they can use pass-through taxation if they
want to do that.
Corporations
must have a certain type of ownership structure. Specifically, they must have a
board of directors, along with shareholders who meet to review the company’s
business. An LLC does not have to have a board of directors. The LLC members
can create a management structure that works for however they want to run the
company.
Nevada
Commercial Registered Agent
Entity # E0502742015-6
NV Business ID NV20151637034
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Revised April 7, 2024 10:24 AM
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