People start businesses to make profits. Therefore, it is vital when forming a business to choose a structure that will increase your earnings. Choosing a limited liability company structure for your business comes with many benefits that maximize your chances of getting more profits through expansion, better management, and so on. Since the formation process is very demanding and may need better experience, you may work with an incorporation service provider. As you choose a provider, choose one who will also handle the filing of your documents and act as a registered agent.
Below are some of the benefits of starting a limited liability company:
Limited liability companies enjoy a lot of flexibility when it comes to membership. They can even have a membership of one person implying a person can start an LLC alone, therefore, have total control of the company and at the same time enjoy the benefits of having limited liability. What’s more, LLCs have no upper limit on the number of people who can be members. Moreover, foreigners, institutions, other LLCs, and even corporations can also join an LLC as members.
Unlike sole proprietorships and partnerships where the owners can be sued for business matures or have their assets seized because of the business’s debts, LLC members do not have to shoulder business burdens. Due to the heavy commitments that owners of partnerships and sole proprietorships may have to bear, it can result in personal bankruptcy and other stressful situations.
LLCs enjoy the best of all business structures when it comes to taxation because they have no defined federal tax classification. They could take up the tax status of various business forms like S corporations, C corporations, partnerships, and sole-proprietorships. The tax authority treats the LLC as either a sole-proprietorship or a partnership, depending on whether it has one or more than one owner.
Due to this treatment, LLC s can enjoy “pass-through” taxation, which will mean the company bears no tax burden, whether corporate taxes or LLC taxes. What happens is that the LLC’s incomes and expenses pass through to the member’s personal tax returns, and then owners can pay tax, personal income tax in this case, on any profits.
In addition to the above, limited liability companies do not have to hold AGMs, observe strict record keeping, or even file yearly reports.…