An LLC is a Great Business Structure For Most Small Companies

A limited liability company, or LLC, can be best described as being a mixture of a partnership and a corporation. To put it simply, limited liability company give a business the best parts of a corporation without all of the protocols usually associated with a corporation.

The owners of an LLC, who are called member, get looked upon as a partnership when it comes to taxes. It passes through income taxes directly to its members, so, unlike a corporation, the LLC itself never pays income tax.

An LLC never worries about the double-taxation issue that a corporate structure faces. To simplify this, because the tax burden is passed on directly to the owners, any income is only taxed once. However, a limited liability company must still pay state (assuming there is any) and federal payroll taxes.

At the time of LLC formation, you choose how you choose the tax treatment desired. You can 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 completely separated, the members are afforded personal liability protection. This is a big reason why people choose to form an LLC versus running a business as a sole proprietor. Also, a business generally earns more reverence when it has a formal business structure, such as an LLC.

Forming LLC is done by a person who does not necessarily have to be a member. There are actually several very good online companies that will create your LLC for a very reasonable cost, which means you are assured that everything is properly set up.

Typically, a member’s monetary liability is limited to the amount of money contributed by that member. And an LLC’s structure allows you to bring in more than one partners, who can be active in the company, or just contribute money.

An LLC is a business structure that is very very much like a corporation, but allows more flexibility to its owners. Creating an LLC with an incorporating online company works best a smaller business in which there doesn’t have to be too many owners.

In the US, the limited liability company is a fairly new business entity. As early as 1986, you could form a limited liability company in only two states. Now, you can form an LLC in every state.