For example, you may want to be able to issue stock, so you can reward key employees by giving them stock options. And LLCs don't issue stock, so profits are divvied up any way the members choose, with no need for shareholders' meetings.Įven with all these advantages, there may be situations where you'll opt to incorporate instead. You can even choose how you want the business to be taxed: either as a partnership or a corporation (or, if you have a single-owner LLC, as a sole proprietorship). Members can run the LLC themselves or hire an outside manager. A member can be an individual, a partnership or even a corporation. With an LLC, however, you hold on to that flexibility: You can have an unlimited number of members, or just one. The same is true if you form a corporation, but when you opt for that business structure, you lose a lot of the management flexibility you enjoyed as a sole proprietor (or you and your partners enjoyed in your partnership). Reasons for choosing an LLCĪs an owner (or "member") of a Limited Liability Company, you're only partially on the hook for unpaid debts or court judgments against your business: Your losses are limited to your investment in the company. This type of business structure has been around for over 30 years, and is now permitted in all 50 states. Self-employed business owners who want to reduce their personal liability for business-related debts and legal problems, but don't want the more complex structure of a corporation, have an alternative: the Limited Liability Company or LLC.
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