Features That Make the LLC a Popular Business Entity Type Among Small Business Owners and Entrepreneurs
Many new businesses are starting to register under the format LLC, which means limited liability company; there are also existing sole proprietorship and partnership entities that are converting to an LLC. The two major reasons for these are the amount saved on taxes and the protection it will give your personal properties even if your new LLC company fails to pay creditors.
A limited liability company (LLC) is one type of business structure, the design of which combines the best features of partnership, sole proprietorship and corporate business formats. Detailing a few of the main features or advantages of an LLC, there are:
- Separate Legal Existence. An LLC has a legal existence that is separate from its members. This means an LLC can continue to exist even after a member withdraws.
- Limited Liability. LLC members, managers and employees are held totally responsible for whatever civil wrong they personally commit; liability for a civil wrong committed by one (member, manager or employee), however, will not affect others. In the same manner, if the business itself fails to pay a creditor (a landlord, a supplier or a lender), and named as defendant in a lawsuit, all the creditor can run after are the assets of the business and/or the money invested by the members in forming the LLC; creditors will not have any legal right to go after any LLC member’s personal properties.
- Flexibility in Taxation. Besides the profits and losses of the business being reported on LLC members’ personal tax returns, just like in a partnership or sole proprietorship, members can also choose to be taxed as either a Subchapter C corporation or a Subchapter S corporation.
The above (as well as the other) features are what make LLC a popular business entity type among small business owners and entrepreneurs.
Corporate lawyers, like those from the law firm Russo, Russo & Slania, P.C., for instance, know that the excitement and the challenges one can face in establishing a new company includes legal concerns that can influence the course of a company’s development and progress. The advice of a qualified legal professional will always prove invaluable for entrepreneurs and business professionals.