Limited Liability Company is a legal entity in which members
of a company are not personally responsible for the company's obligations.
Limited Liability Companies are hybrids that combine the characteristics of a corporation
and an independent owner or partnership.
Limited Liability Company-Advantages
Limited Liability: As a company, LLCs provide their members
(owners) with personal responsibility for the obligations of the company.
Members are only responsible for the amount of their investment in the company.
Avoiding Double Taxation: The profits of the LLC are
transferred to the members of the company that report their share of profits in
the context of personal federal tax returns. The company itself does not pay
the federal tax before the money is distributed among the members. However,
state and local taxes can still be applied to LLC.
Simplicity: Another major advantage of LLCs over companies
is their easy creation and management. Considering that inclusion can be an
expensive and costly process, all that is needed to start the LLC is the filing
of an organization's statute and the preparation of an operational agreement
that defines the policies and procedures of the company (however it will be
request a filing fee) of LLC). And while a company requires a board of
directors, officers and regular meetings of shareholders and directors, LLC is
not required to comply with these formalities in its business. An LLC can be
performed day by day essentially as if it were a partnership.
LLC is a good combination of security with flexibility and
tax breaks. It provides a series of tax alternatives protecting individual
members from personal responsibility. LLCs are perceived as suitable for small
businesses, as there is less difficulty and complexity in their operation.
However, it is advisable to consult an accountant or consultancy expert before
making the final decision.
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