LLC

The Pros of Forming an LLC

One of the most popular business structures in the United States of America right now is a limited liability company or LLC for short. Why is it popular, you ask? Well, for starters, the most apparent reason would be that you, as the owner, are protected from liabilities. Your assets and wealth won’t be used as collateral to pay off your company’s debt and liabilities. This is why most business owners, especially the young ones, are applying to become a limited liability company to protect their assets.

Your follow-up question might be, “How do you form an LLC?” the best and easiest way would be hiring an online LLC formation service. They are familiar and well-versed in the state’s LLC formation requirements and can do the registration process for you. You just need to provide them with the general information and necessary paperwork, and they will process your application in a quick and orderly fashion.

Pros to Forming an LLC

If I guessed, your next question would be, “What are the advantages of forming an LLC?” The obvious answer would be in concordance with the statement above, which is personal asset protection. But that is not all of the advantages of forming an LLC. I have listed them below for your reading comprehension:

  •     Pass-Through Taxation

Tax

A corporation has severe taxes going its way because it imposes a double taxation system where the company’s profit is taxed twice. This is because the state recognizes the corporation as a separate entity from the owners. Therefore, the first tax goes to the corporation, and then the second tax goes to the owners. However, this double taxation model does not apply to a limited liability company with no company tax, only the owner’s personal tax.

  •     Flexible Management Style

One of the reasons young business owners prefer an LLC over a corporation is that they can manage their company without making changes to their structure. A corporation will need a board of directors to report directly to the stakeholders, and the stakeholders have a say in the company’s matters. In comparison, partnerships require multiple owners that can slow down decision-making and create tensions and uncertainty inside the company.

  •     Less Meetings

Informal

Another key reason would be fewer formal meetings are required. There is no need to hold yearly stakeholder meetings and other formal meetings that can take a lot of time away from your hand. This means that you can focus more on generating a profit and expanding your business.

The Bottom Line

LLC can be beneficial if you are still young and you want to grow your business aggressively as their formation is easy, doesn’t cost much, pass-through taxation, flexible management style, and fewer meetings can really move in your favor and fit in with your leadership style.

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