The limited liability company (LLC) has been gaining in popularity for several years and is now available in all 50 states and the District of Columbia. It is an appropriate business structure for both start-ups and mature businesses.
The advantages over other business structures include:
- Unlike a corporation, an LLC in not required to have a board of directors and an annual meeting.
- Because an LLC does not issue stock, it has more flexibility in the way it distributes income to its managers and members.
- Like a C corporation, an LLC helps protect the personal assets of the business owner from claims arising from operation of the business.
- Most significant is its flow-through status for paying federal income taxes. Similar to sole proprietorships, S corporations, and partnerships, income generated by a limited liability company is passed directly through to the business owners’ personal income tax return and is taxed only once. This avoids the double taxation that occurs when corporations pay a tax and individual stockholders pay an additional tax on the dividends they receive.
For further information about structuring your business, see:
