Law and Llc

After researching the most effective classification for your company, I have come to a decision. The Limited Liability Company, otherwise referred to as LLC, is the best classification for the purposes of your newfound business. There are many aspects as to why I have made this decision. The factors that I researched include; liability, taxes, management, continuity, cost and ease of formation, mobility, government regulation, and flexibility. Limited Liability Companies have many advantages and relatively few disadvantages for the type of business you all are forming. In a short summary, a LLC is a mix between a corporation and a general partnership and this leads to the many advantages.

In terms of liability, LLC has an advantage because only business assets can be accounted for if you are sued. Your liability is limited to the amount of your investments into the company. Your personal assets cannot be used to compensate the accuser. This is an advantage that other company classifications cannot benefit from because LLC is a hybrid between corporations and general partnerships. In this particular case, LLC’s have limited liability like corporations. Therefore, classifying your business as a LLC gives you limited liability in terms of your personal assets.

LLC’s have a huge advantage in taxation. For one, they have the choice of being taxed like a corporation or a general partnership. If members (owners) wanted to distribute profits, you may want to be taxed like a general partnership which will avoid the “double taxation” which corporations would have. The LLC as a unit pays no taxes. LLC is considered the most flexible in terms of taxation because it can be taxed as a corporation as well. A company may do this if they want to reinvest their profits into the company because corporate income tax rates may be lower than personal income tax rates. Therefore, taxation is extremely flexible and efficient.

Management is determined by the members....