The Biggest Advantages of an LLC
- August 22nd, 2014
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So you’re wondering about what type of company you should set up. You consider the different kinds of partnerships and different types of corporations that you could establish. But you decide that maybe a Limited Liability Company (LLC) is right for you—a bit of the best of both worlds. Before you make a final decision, you’ll want to weigh the pros and cons: what are the advantages of an LLC? Let’s take a look…
The Advantages of an LLC
The name makes one of the biggest pros of this business model clear as day: limited liability. The members of an LLC are legally protected from being personally liable for any business actions or decisions that put the company in jeopardy. For example, if the company is sued for something, or incurs a substantial debt, the members are (usually) protected from having their personal assets seized. Of course, this protection becomes nullified if their personal actions are what put the company in jeopardy to begin with, but for the most part the members of an LLC are protected from this kind of legal action.
Another tremendous advantage of an LLC is its ease of operation. Unlike some of the others you’ll review when comparing business types, LLCs require much less paperwork and recordkeeping, as well as significantly lower start-up costs. Both C and S Corporations have a fairly large amount of paperwork that needs to be kept in order to abide by all of the regulations imposed upon them.
In addition to a lighter load of paperwork, profit sharing is also much easier for LLCs than other types of companies. Much like one of the biggest business partnership advantages, being able to share profits among members is a huge selling point for LLCs. In this structure, however, profits can be distributed however members choose, rather than being split equally as they would be in a partnership. One of the disadvantages of a partnership is that some partners may put in more work than others, but still have to share the profits equally; in an LLC, that is not the case.
If you have more questions about the advantages of an LLC, or for help deciding what type of company structure is right for your new business, contact the tax professionals at JRH & Associates at (516) 794-5752 today!