Sunday, March 8, 2009

More about the LLC

How You Can Benefit from a Corporation or LLC
Regardless of their size, all businesses can benefit from incorporating. Typically, the reason most people form a legal business structure is to safeguard their personal assets. Incorporating or forming a Limited Liability Company (LLC) helps you conduct your business free from worry that you might lose personal savings or possessions because of a business liability.

Advantages of Forming a Corporation or LLC
Personal asset protection. Both corporations and LLCs allow owners to protect their personal assets. In a properly structured and managed company, owners should have limited liability for business debts and obligations.

Improved credibility. Adding "Inc." or "LLC" after your business name can add instant authority. Consumers, vendors, and partners may prefer to do business with an incorporated company.

Nationwide availability. All 50 states and the District of Columbia now recognize both corporations and LLCs.

Name protection. In most states, other businesses may not file your exact corporate or LLC name in the same state.

Ensured continuity. Corporations and LLCs exist perpetually, even if ownership or management changes. Sole proprietorships and partnerships end if an owner dies or leaves the business.

Tax flexibility and savings. Corporations are taxed at a lower rate than individuals. Though profit and loss typically pass through an LLC and get reported on the personal income tax returns of owners, an LLC can also elect to be taxed as a corporation. Likewise, a corporation can avoid double taxation of corporate profits and dividends by electing Subchapter S tax status.

Deductible expenses. Both corporations and LLCs may deduct normal business expenses, like salaries, before they allocate income to owners.

Not Ready to Incorporate Yet?
Try our Business Startup Wizard to learn what others in your state and industry have done.

Download our Free 10-Step Business Formation Guide.

Get more details about forming a corporation or LLC in our Small Business Resources, or check out another service.

Sharon LaMothe
LaMothe Services, LLC

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