Are you looking to start a business? An LLC is a great business structure startup. What is important is that the LLC is formed according to the law that a particular state has. Furthermore, the owners or the members of the LLC are protected. On the other hand, unlike Corporations, LLC’s in the USA have more tax flexibility, keeping in mind that the owners are the ones that will be taxed. If you do not like paperwork do not worry because there are plenty of online services that will take care of that for you.
The benefits of a Limited Personal Liability when forming an LLC
The benefits of an LLC is that if there are several members and if one of the members has personal debt it will not affect the LLC at all, unlike a partnership. The LLC takes full responsibility for the debts. Furthermore, even though an LLC has less risk as a member you could work at a loss. Luckily for you all the personal assets you have accumulated over time those assets cannot be used as debt collection.
Do you want to start a business but hate paperwork,an LLC is a step in the right direction
If you own a Corporation you probably know the amount of paperwork that goes into meeting certain requirements for the Corporation. Shareholder meetings are held annually when you are an owner of a Corporation amongst other things. All the annual reports and meetings have certain record-keeping requirements. On the other hand, an LLC is not required to have annual shareholder meetings. Furthermore, record keeping is not crucial and the cherry on top the annual reports are not a requirement.
All the tax flexibility that comes with forming an LLC
Owing an LLC, it simply means that you don’t have to worry about tax as much. Furthermore, LLC’s have the freedom to follow the tax status of either a Corporation or a partnership. The advantage of an LLC is that they have what we call pass-through taxation, which simply means that the LLC does not have to pay any taxes. However, the expenses, as well as the income, go through the owner’s taxable income.
How do you have flexibility through ownership and management?
Unlike Corporations who have a maximum of several ownership restrictions with regards to how many shareholders they can have. An LLC has no ownership restrictions at all and is allowed to have up to 100 members within the LLC. Furthermore, Corporations have a strict management structure. Every single Corporation is required to have a board of directors. On the other hand, an LLC has no formal management structure in place and are given free reigns and how they choose to have their business operations. The best part of owning an LLC is profit distributions do not have to be divided according to ownership equity of each shareholder.
Which states are LLC’s more prominent?
The top nine states in the USA are where LLC’s are most prominent. However, note that each state has its own sales tax. The state of Wyoming is great to have an LLC if you are looking for a 0% tax rate. On the other hand, Alaska is known for its average effective property tax rate at 1.19%. Still unsure where to have your LLC, well South Dakota could be a great state which has an unemployment rate of 3.2%. Florida is known for its amazing beaches but they also have a great Corporate Tax of 5.5%. Looking for a state that has class and sophistication than New Hampshire is the state for you and your LLC. This is the only state that has a business enterprise tax. For more information read more.