Limited Liability Company (LLC) - Basics:

Limited Liability Company (LLC) - Basics:

Becoming a limited liability company is harder than just being a partnership or sole proprietor but its benefits will most likely pay off big-time in the end. A limited liability company combines the benefits of both a partnership and a corporation. By becoming a limited liability company you can get the best of both worlds.

Benefits of a partnership:

Partnerships and corporations both have their benefits. A partnership has benefits that a corporation does not while a corporation has benefits that a partnerships does not. A partnership has the benefit of better taxes than a corporation. If not better then at least easier. Instead of the company being taxed annually, only its members are taxed.

In a corporation the owners and the business are considered separate from each other. In a partnership the business is not taxed as a while, but each member is taxed individually. Each member of a partnership has to file their own report of their gains and losses. This makes it much easier on the company finances and budget books.

Benefits of a corporation-

A corporation does not have these tax benefits but they do have what is called limited liability. This means that the owner of the business is protected against business debts and claims. If someone wanted to sue the company, they could not take the owner's personal assets. The owner could be sure that their personal possessions were not going to be taken from them. These would be things such as cars, homes, properties etc.

The owner of the company would be protected against losing their possessions meaning that their personal stuff is separated and individual against their corporation stuff. If someone were to sue them or try to take their stuff the most they could take would be anything that the owner has invested into the business. While this would still be a great loss, it is a much better loss than losing everything that you have.

There are exceptions to the limited liability and that is if the owner does personal things. Personal things such as personally injuring someone, personally guaranteeing a loan without paying it, or combining their personal affairs with their company affairs. It is not good to combine personal affairs and company affairs (such as finances) because then it does not look as though you are actually treating it like an LLC but like a personal business and you could lose your benefits.

Benefits of a limited liability company (LLC)-

A limited liability company combines both of these benefits. You have the benefit of the limited liability that the corporation has as well as the benefits of better taxes such as partnerships have. You do not have to worry about only having one or the other, you can enjoy them both.
Managers of a limited liability company (LLC)-

In most limited liability companies everyone participates in management. It is called member management. But if they do not like this type of management they can also choose to have manager management. This means that you select people to be managers and only those people can make decisions and such. It can be a good thing to do but sometimes it means that you will have to deal with more laws and such.

Limited liability companies are a great way to go for small businesses. They have great benefits that will help your business to run very smoothly and securely. Even though it may be harder to become an LLC it will definitely be worth the benefits. If you are considering becoming an LLC, the answer would be a definite yes.