The year is winding down, and that presents many opportunities to get together with your loved ones and appreciate the best things in life. Aspiring business owners have reasons to be thankful for the ever-popular limited liability company (LLC) structure. Trembly Law Firm continually sings the praises of this business structure, but that’s only because we know how useful it can be! Below are five reasons to consider becoming an LLC member.
1. Your assets will be protected.
This is where the “limited liability” comes into play. When you incorporate your business into a limited liability company, any lawsuits (and subsequent judgments) against the business can only be satisfied with the company’s money—not yours. This provides an important layer of protection for LLC members (owners). However, this does not give you free reign to commingle business and personal assets. If you do so, the limited liability may go away.
2. You can avoid double taxation.
The default tax status of an LLC is a “pass-through” classification. This means that profits realized through the LLC’s operations are only taxed when members report it on their individual income tax returns. This stands in contrast to corporations, which generally tax profits at the business level and individual level. This allows you to enjoy a larger percentage of your LLC’s success. You still have the option of choosing corporation-like tax treatment for your LLC if it would be advantageous.
3. Delaware beckons!
You should not feel forced to establish your LLC in Delaware, but you might realize several benefits if you do. For one, the state’s Court of Chancery is a unique judicial venue that only hears business disputes. This can mean a more efficient process if your LLC ever gets sued. If you establish your LLC in Delaware but do not actually do business in Delaware, you probably won’t have to get business licenses or pay many taxes. Another benefit is that businesses established in Delaware often look more attractive to outside investors.
4. Formalities and requirements are relatively light.
To be fair, forming and maintaining an LLC is more complex than running a sole proprietorship. Compared to the requirements of starting a corporation, though, an LLC is quite simple. While LLC members must fill out several forms and pay fees, the recordkeeping requirements for LLCs are also less arduous than they are for corporations.
5. Your business will have a new aura of authenticity.
If you have substantial long-term goals for your business, incorporating is good for plenty of intangible reasons. The democratization of commerce, mainly owing to the internet, has made it easier for people to launch side hustles and low-key business operations. Still, the vast majority of customers and investors are more likely to do business with, well, an actual business entity. Referring leads and potential customers to XYZ, LLC is empowering and lends your enterprise a credibility it wouldn’t otherwise have.
These benefits of forming an LLC do not happen by accident. To get the most out of your current or future LLC, you need the help of an experienced Florida business lawyer. Our team is passionate about helping business owners put plans into motion while keeping the legal side locked down. Let’s talk soon.