Wednesday, June 12, 2019

LLC Information: The Basics of a Limited Liability Company


You will find a lot of LLC information on the Internet about the limited liability company. This legal entity has become the most common and popular of all other choices because it was specifically created to be the most flexible entity available.

As a result, it can be used for small business, real estate, holding and managing any property, family and estate planning, and joint ventures. One can be really simple such as for a single owner small business or an LLC can be used to handle very large and complex activities. For example, Fidelity Investments is an LLC which is owned by many owners and manages billions of dollars of assets.

This Article covers the basic attributes of this amazing legal vehicle.

CREATED BY LAW ONLY

A Limited Liability Company is a separate and distinct legal person that is created at the state level. It is only formed once a state has acknowledged its existence.

And, in order for a state to establish one, there must be a document filing made by an organizer. The filing is usually called the Articles of Organization and it must strictly comply with the requirements of a state. Each state has its own set of requirements and disclosures and fees.

PERSONAL LIABILITY PROTECTION

Once formed, an LLC provides its owners with legally endorsed personal limited liability protection from the entity's debts and obligations. This feature is similar to the corporation.

If you are worried about personal exposure to lawsuits arising from your business, you should form a limited liability company. For example, you open a store-front business that deals with the public directly, you may worry that the commercial liability insurance you have might not fully protect your personal assets from potential slip-and-fall lawsuits or even claims by suppliers for unpaid bills. Running your business as a Limited Liability Company will give some protection against any other claims against your business.

PASS THROUGH TAXATION

If the entity is owned by just one member, then there is no added tax complexity. The income generated by the LLC is passed through to the single owner and reported on his or her personal return. Even if it is owned by multiple members, profits and losses are normally passed through the owners as if it were a partnership. But unlike a general partnership, on owners are subject to personal liability because of ownership.

This tax benefit is a significant one. The corporation, another alternative, offers the same personal asset protection but is subject to what is known as double taxation. While there is an option for elect for a corporation to be taxed as a pass-through (single layer), there are quite a few requirements and restrictions. With the LLC, your entity will automatically qualify for the best tax treatment.

SIMPLE TO MANAGE AND OPERATE

Another great feature is that you can tailor the management and ownership structure of a limited liability company to suit your needs. There are very little legal mandates and this makes it easier for anyone to use one to meet their specific purposes.

Article Source: http://EzineArticles.com/?expert=Amy_McDaniel

Article Source: http://EzineArticles.com/5463855

No comments:

Post a Comment