The Pros and Cons of LLCs
A limited liability corporation (LLC) is one of the many means of formally structuring a business. It’s basically a cross between a single proprietorship, partnership and that of a corporation. There are a few benefits associated with forming an LLC structure, but there are also pitfalls to know about.
Here’s a discussion of the pros and cons of having an LLC setup for your business:
A limited liability corporation is quite simple to set up. In fact, every state allows individuals to create an LLC by filing the articles of organization. What you need to file an LLC are the name of the business, its address, and the names and addresses of the owners. It will also require the address of the registered agent or the person or company that will accept legal documents on behalf of the company. You can easily download LLC forms online.
As the name suggests, LLCs provide protection for the owners of the business. It provides what is called “limited liability.” This means should your company go into debt, your personal assets and that of the members won’t be sequestered. Another advantage of LLCs is that members could be private individuals, other LLCs, corporations and even foreign companies. There’s no limit as to how many members a typical LLC could have. Even a single person can form his or her own LLC.
Take note that not all kinds of businesses are allowed to form an LLC, such as banks and insurance firms. Also, there are some US states that specifically forbid certain professions from forming one.
There are also some states that impose a special tax for LLCs. Some may charge a standard rate.Others have a sliding scale setup on things such as profits, revenue, and number of owners. If you need more information, you can research online to know the benefits of filing LLCs.