| For entrepreneurs who are starting new | | | | take advantage of cheaper taxes. |
| ventures, Limited Liability Companies or LLCs are | | | | Speaking of taxes, unless you've chosen to be |
| among their most popular choices of business | | | | taxed as a C corporation or you've established |
| types. If you've ever looked up the names of | | | | your LLC in the District of Columbia, you don't |
| companies who offer products and services you | | | | have to worry about double taxation. You are |
| like, you might find that some of them have | | | | taxed only once for the same income. This |
| company names ending in "LLC". Basically, an LLC | | | | advantage makes the LLC an attractive choice to |
| is a type of company. It's one of the options | | | | individuals who run a consulting or freelancing |
| available to you if you've ever thought about | | | | business. |
| starting your own business. But before you | | | | Despite its benefits, an LLC also has its |
| register your business this way, you need to learn | | | | disadvantages. One major disadvantage is that |
| more about LLCs to see if they're the right type | | | | you cannot sell stock or shares of the company. |
| of company for you. | | | | This makes it difficult to expand a business, |
| Let us start with a simple explanation of LLC. The | | | | especially for companies that plan to go public |
| acronym stands for "Limited Liability Company". | | | | someday. Also, if one of the owners wants to |
| This means that the owners of the LLC, also | | | | leave the company, the LLC has to dissolve and |
| known as "members", are not personally liable for | | | | be reformed again with the remaining members if |
| company debts and expenses. You might wonder, | | | | they want to continue running the business |
| "But don't other types of companies, such as | | | | together. |
| corporations, offer that kind of protection as | | | | Also, the LLC is a relatively new entity. Because |
| well?" The answer to that is yes, other types of | | | | of this, it doesn't have the prestige or |
| businesses can give you limited liability, but the | | | | trustworthiness attached to a corporation or |
| LLC has other advantages. | | | | other type of business. This makes it harder to |
| First of all, it's relatively easy to form. Most states | | | | seek funding if you're looking for outside |
| have downloadable forms that you can just mail | | | | investors. This also means that state laws about |
| in. In most states, the fees you pay are minimal | | | | LLCs also vary since there's no singular consensus |
| (unless you opt for expedited processing). As for | | | | as to how the government should treat them |
| the long run, the records and paperwork required | | | | fiscally and administratively. |
| of LLCs are also usually simpler. | | | | As you can see, just like any other business |
| Another advantage of an LLC is that you can | | | | structure LLCs have their own advantages and |
| choose how you want to be taxed. You can opt | | | | disadvantages. It's up to you, the business owner, |
| to be taxed as a partnership, S corporation, or C | | | | to determine whether the benefits of setting up |
| corporation. This flexibility is attractive to many | | | | an LLC is worth the disadvantages you'll be facing. |
| business owners, especially to those who want to | | | | |