A Limited Liability Company can offer great protection for a business owner looking to minimize personal liability. Why is this important? If you own a business and a customer were to get hurt in your business establishment, you could be sued along with your personal assets. If you form an LLC then your personal assets are usually protected and the business is now a stand alone entity. Therefore, only the assets in the LLC are subject to lawsuit, not your personal assets.
Different types of Entities:
Limited Liability Company offers great flexibility. Income is passed to the member(s) and is taxed on their return. Upon filing for an LLC, then a SS4 form is filed to get a Tax ID # for the entity. You should include an operating agreement for the business. This will help prove this is a legal entity. In addition, personal and business funds should not be commingled, this would be one way to prove this is not a legitimate business. Be aware this entity is subject to self employment tax of 15 percent. Lastly any meeting(s) (minutes) should be recorded to help prove business viability.
S Corporations provide protection as well, but involve more paper work. They require company minutes, operating agreements, financial statements, stock holders certificates. Taxes can be pass through taxation. Usually, self employment tax is split between corporation and individual receiving compensation.
C Corporation is the same as an S Corporation except for taxes are 15% business tax. In addition a C corporation can have retained earnings.
Limited Liability Company is the simplest way to have your business be a separate entity and provide owners with personal asset protection. There are many benefits to an LLC. You should consult with an attorney to see which is right for you and your business. None of the above information is considered advice.
To learn more about Limited Liability Comapany, visit my website now. Read about LLC today and make the right decision for your business entity.
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