LLC Advantages for Small Business Owners

Benefits of Limited Liability Corporations

A Limited Liability Corporation, or LLC, is a type of business that can offer a variety of advantages to the entrepreneur or small business owners. Its structure is that of a mix between a corporation and a sole proprietorship, but they are not structured specifically for a small business owner. Some of the benefits of an LLC are discussed in the article below.

Limited Liability

Business owners of an LLC are not responsible for lawsuits or debts, which is one of the major benefits and selling points of this type of business. Owners do not have to worry about being held responsible for any legal judgments against the business, and they do not have to worry about their personal property being lost if there was some type of lawsuit. An owner is only responsible up to the amount they actually invested in the LLC.

Taxation

Business owners of an LLC have the option of only being taxed on their loss or profit. They are not taxed on the business level; rather they are taxed on the partner’s individual tax return. This type of set up is known as a “pass through” entity, and business owners can choose to reinvest profits into the firm without facing additional tax.

Quick Set Up

Setting up an LLC is a relatively simple process, and the only paperwork an owner would need to complete is the LLC Operating Agreement and Articles of Organization. The Operating Agreement defines the responsibilities and rights of the owner, and it is not required by law. The Articles of Agreement is the business declaration that must be filed as required by the state’s law at the LLC filing office.

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