There are various legal structures of a business that you can have. One of these is Limited Liability Company or LLC, which many entrepreneurs consider worth taking.
But, do you know what makes an LLC the best option for a business structure? Find out below the various characteristics of an LLC and see if it is ideal for you.
What is an LLC?
Limited Liability Company is a business structure where the business owners, also known as members, can enjoy personal liability protection.
It means that their individual assets won’t be used in recovering their business in case of any losses. Typically, an LLC is handled by the state and follows specific rules too.
Moreover, an LLC registration requires filing an Articles of Organizations, which has a fee. Fees vary from one state to another. For instance, Washington LLC cost $180 to $200, depending on how you will file it, either via mail or online.
LLC’s Attributes
LLC, as a business structure, has various characteristics that make it stand out among all systems. To give you an idea of what makes an LLC an ideal business structure, here are the following :
1. Limited liability
Limited liability protection is the main advantage of an LLC. Typically, on other business systems, each member is always responsible for other team members, which is quite tricky to handle.
On LLC, the only thing you hold responsible for are your actions, and in case of any losses on your business, all your personal assets such as car and house won’t be at risk.
2. Separate legal identity
Given the fact that LLC offers limited liability protection, it also means that it operates as a separate legal entity from the members.
However, it can still enter contract agreements and transact business using its own name. If there is an unincorporated partnership, members incur such debt as a group, and it can still continue even if some members decided to withdraw.
3. Flexible taxation
An LLC business structure gives you the freedom on how you want to be taxed. But the first thing you need to do is to file LLC taxes. You can declare it as a single-member company or multi-member LLC.
Likewise, you can also file and have it either an S-Corporation or a C-Corporation. Your taxes will be incurred rightly given the fact that the IRS doesn’t see LLC as a separate tax entity.
4. Simple Formation and operation
You can enjoy the simplicity of an LLC when it comes to forming and running the company. Filing documents needed is simple as well.
There are states that annual meeting and minutes of the meeting is not necessarily required, which provides convenience on the part of the members.
Likewise, not unlike a corporation that should have a strict record-keeping system, simple record keeping will do under the LLC system.
Summary
If you look closely enough, a Limited Liability Company has more favorable attributes when holding responsibilities than any other business structure.
Liability protection is one of the winning features of this system. This is the reason why entrepreneurs prefer using LLC in their business, especially startups. Besides, everyone wants their personal assets to be safe and separated from their business after all.
Read Also:
- How To Set Up A Limited Company
- How To Keep Your Company Culture After Moving To A Coworking Space
- 12 Ways to Cultivate A Creative Company Culture
Author: Joyce Velosco
