Why Form a Limited Liability Company (LLC)?

When starting off on a new business venture, business owners often start with a basic DBA (“doing business as”).  The DBA is simply a way of registering your business under a name other than an individual’s own name, however, it falls short of providing any liability protections for small business owners leaving their personal assets subject to the obligations and claims against the business.  Here are a few reasons why you should consider forming a limited liability company:

Limited Liability: LLCs offer limited liability to the members of an LLC.  This means that only the assets of the business itself would be subject to liability claims or judgment creditors.  Liability protection can be lost where members engage in fraudulent or criminal activity, activity that might cause the business to become insolvent, or in instances where members sign personal guarantees and agree to be personally liable.

Tax Benefits: LLCs provide flexibility with the option to be taxed as a sole proprietorship (or partnership when there is more than one member), S corp or C corp depending on what would best fit the company needs and structure.  LLCs taxed as a sole proprietorship, partnership, or S corp can receive the benefits of pass through taxation and avoid being double taxed as a corporation and an individual.

Ease of Operation: Unlike corporations, LLCs have very few formalities that members must maintain to comply with state law.

Professional Appearance: Establishing an LLC or formal corporate structure along with a formal written business plan can aid a business in projecting a professional image and may assist with efforts to obtain funding or financing for the business.

CONTACT US for assistance or questions related to Limited Liability Company formation or help with company operating agreements.