Advantages of an Llc

Advantages of an LLC

LLC AdvantagesA limited liability company (LLC) has many advantages as a form of business entity:

* Pass through taxation - under the default tax classification, profits taxed at the member level, not at the LLC level nodouble

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taxation.

* Limited liability - the members (owners) of the LLC, are protected from liability for acts and debts of the LLC.

* An LLC can elect to be taxed as a sole proprietor, partnership, S-corp or corporation, providing the correct option for your business.

* Can be set up with just one natural person involved or, in some states, one owner which may be an business itself.

* No requirement of an annual general meeting for shareholders (in some states, such as Tennessee and Minnesota, this statement is not correct).

* No loss of power to a board of directors (although an operating agreement may provide for centralization of management power in a board).

* LLCs are enduring legal business entities, with lives that extend beyond the illness or even death of their owners, thus avoiding problematic business termination or sole proprietor death.

* Much less administrative work and recordkeeping.

* s of LLCs can be assigned, and the economic benefits of those interests can be separated and assigned, providing the assignee with the economic benefits of distributions of profits/losses (like a partnership), without transferring the title to the membership interest.

LLC Disadvantages

* Earnings of most members of an LLC are generally subject to self-employment tax. By contrast, earnings of an S corporation, after paying a salary to the shareholders working in the LLC, can be passed through as distributions of profits and are not subject to self-employment taxes.

* Since an LLC is considered a partnership for Federal income tax purposes, if 50% or more of the capital and profit interests are sold or exchanged within a 12-month period, the LLC will terminate for...