Historically, the two most common forms of business were the corporation and partnership. Today, through some modern legislation, many companies are setting up as limited liability companies, or LLCs. This is because the LLC represents a sort of hybrid business form that combines the features of both partnerships and corporations. There are many formal and informal benefits associated with converting your company to an LLC, which will make the transition worth the effort.
Limited Liability. The foremost benefit of a limited liability company is limited liability, as the name indicates. In a partnership, the partners expose themselves to personal liability whereby a partner’s individual assets may be used to fulfill any outstanding partnership obligations. In an LLC, the only assets at risk are those that belong to the company. Therefore, the business owners in an LLC do not risk losing their personal assets for a venture that may go astray.
Tax Incentives. The tax structure of an LLC provides further great incentive. There are more tax deductions available to owners of an LLC than other business forms. Further, owners of an LLC are not exposed to double taxation for income generated as dividends, such as in a corporate structure.
Greater Powers and Better Stability. Limited liability companies have greater powers than traditional partnerships. The LLC can, in and of itself, hold, purchase, and convey property in its own name rather than in the owners’ names. Because LLCs are treated as separate entities, they have the power to contract in the company’s name, and will continue to exist even upon the partners’ deaths or departure from the company. Further, it provides greater means to raise revenue. Finally, simply filing as an LLC and being able to hold the company out as such to others signals stability and safety. Third parties may be more willing to transact with an LLC than a partnership due to this simple fact.
Forming a limited liability company has many benefits–some obvious such as limited liability, and some not so obvious, such as stability. As a business owner, it is probably in your best interest to convert your current business to an LLC. Consulting with the right legal team can ensure an easy and efficient transaction. Call the Trembly Law Firm at (305) 431-5678 today to schedule your consultation.