What is LLC? Can it suit all types of businesses? What are the procedures to form LLC? If you are interested in LLC, you might prefer to educate your mind with all the required information before taking any decision. In this article, we will cover all the aspects with pros and cons.
What is LLC?
LLC stands for Limited Liability. It offers an easy and simple structure to form your business as well as to protect all your personal assets when your business is issued. You can own it individually to become an LLC member. It can be also owned by multiple people. When it is owned by one person, it is known as the single-member LLC. When there will be more than one owner, it will be known as multi-member LLC. When you ready to start your business same with this Legalzoom LLC promo code.
Can Every Business Form An LLC?
It will depend on the types of business and its goal. As stated earlier, LLC is a business structure. If you want this structure for your business, you can go with it. Otherwise, you can consider other structures such as General Partnership, Sole Proprietorship, and Corporation. You can choose any of these business structures to ensure proper growth and to secure your business information.
Business owners prefer LLC since it is simple and offers the right protection to your personal asset. Unlike other business structures, it will protect your personal assets when your business is sued. Another benefit is that it is easy to form and maintain.
What is the Procedure?
- Choose and reserve a legal name
- File Your Articles
- Decide the owner of your business
- Decide the numbers of the owners who will be the part of the LLC
- Get all the required certificates including your business license
- Get an Employer Identification Number (EIN)
- Inquire about other ID number required by your start or government agencies
The process will vary depending on the jurisdiction. However, all businesses need to pay disability, unemployment, and payroll taxes. Also, tax ID numbers of all those accounts will be needed along with EIN.
Benefits
Personal Asset Protection: Personal assets will be protected if the business is sued
Pass through Taxation: The profits of LLC are taxed only once. In other business structures, you will find double taxation.
Simplicity: LLC does not demand much paperwork. It is easy to form and easy to maintain as well. Like other structures, LLCs do not need to assign formal office roles or hold annual meetings.
Flexibility: LLC is flexible than other structures. You can be a single member and multimember. Also, it can be managed by managers or members. It can be elected to be taxed as S-crop or C-crop.
Increased Credibility: It offers more formal business structures. With an LLC, you can access business loans.
Cons
Lack of Uniformity: LLC is treated differently in different states
Self-employment Taxes: Owners need to pay tax on their share of LLC income
Conclusion
LLC can be ideal for all those who are looking for a simple business structure. Yes, it will protect their personal assets and can help to create a trustworthy environment.