Why Use A Limited Liability Company?
- Easy and inexpensive to form.
- Recognized by all states.
- Limited liability for all members.
- One level of tax for federal income tax and state income tax purposes (in most cases).
- Pass through of business losses to the member or members.
- Can utilize a corporate management structure.
- Can have one member or multiple members.
- Flexibility in distributing cash to the members.
- Flexibility in allocating profits/losses to the members.
- Flexibility in conducting business affairs.
- Can exist indefinitely.
The LLC Entity Form –The Right Entity Choice For Most Of Us
Under current law, unless a start-up company wants to go public or a company will be engaged in a complex cross border transaction, there is very little reason to choose to operate as a “C” corporation or a “S” corporation. Most of the non-tax advantages of operating in corporate form are now available in all states in the form of the LLC, and the double tax creates a clear tax bias against the corporate form. An LLC offers all of its members’ limited liability without restrictions on their participation in the venture. Furthermore, ownership interests in the LLC can be freely transferable if its members so choose. For these reasons, it is significantly more common for a new business to select the LLC entity form when starting a new business and not a “C” corporation or “S” corporation.