Starting a business can be both an exciting and scary process. New businesses often require significant financial investments, extensive planning and lots of hard work.
When starting a business, among the questions is what type of business entity an owner intends to use to form the business. One popular structure that many new business owners select is the limited liability corporation, or LLC.
Why an LLC?
A primary advantage of an LLC is that it protects the owners, referred to as “members” of the LLC, from personal liability for the LLC’s debts. In other words, creditors cannot go after the members’ personal assets if the LLC is unable to pay off its debts.
An LLC also offers certain tax advantages by allowing profits of the LLC to “pass through” to members without the LLC first having to pay taxes on the profit.
Finally, an LLC offers its members flexibility in managing the operation of the business. Members are able to structure the LLC in a manner best suited to their individual needs.
Other options
While an LLC is a great option for many businesses, there are other options that may fit your business needs better, such as forming a partnership, a sole proprietorship or a corporation. Each has its own advantages and disadvantages.
If you are starting a business or even reevaluating the structure of an existing business, it is important to speak with an experienced attorney.
An attorney can explain your options and assist with preparing the proper documents to establish the business entity. That way, you can focus on what matters: building your business for a prosperous future.