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An LLC is a relatively new form of business organization that has gained in popularity over the past ten years. LLC stands for Liamited Liability Company. An LLC is not structured like a partnership or a corporation. An LLC has members instead of shareholders. Unlike a sole proprietorship an LLC business is a legal entity separate from the owner(s). An LLC business has many tax and liability benefits that are not available with other business structures like a sole proprietorship, partnership, or corporation.

In a sole proprietorship or a partnership the business and the owner(s) are legally indivisible. With an LLC however,Most common wild flowers are also edible, if the business is going through a rocky stretch financially you are not held responsible for any debts and your personal assets are not at risk. Also you won’t have to carry any debts over to new ventures if your LLC business goes bankrupt.

With a corporation all money invested belongs to the corporation and if the corporation is sued it must use the collective invested money to pay any damages. An LLC works differently. All money invested in an LLC stays with the member who invested it. Individual members of an LLC can be sued where as a corporation can only be sued, not its individual members. If an LLC is sued only the negligent member is liable and only the money invested by that member can be used to pay damages.

An LLC offers the liability benefits of a corporation with the tax benefits of a sole proprietorship. A corporation’s business profits are taxed by most states and then taxed again by the federal government. The profits taken in the form of bonuses and dividends by board members are then taxed again as the personal income of those members. An LLC can bypass corporate taxes. The profits of the LLC can be passed though to the LLC members and be reported on their personal income tax return. Therefore the money is only taxed once instead of several times like with a corporation. An LLC pays one set of taxes as a group. Therefore it can deduct business expenses as a group. Most LLC find that it is more cost effective to pay taxes as a group than as an individual member.

Another great advantage of an LLC over a sole proprietorship is passing your business onto to heirs. A sole proprietorship is legally inseparable from you so when you pass away the company ceases to exist. It will be difficult for your family to obtain your life’s work without very sophisticated estate planning. It’s much easier for them to inherit an LLC structured business.

There are many great advantages to converting a sole proprietorship or partnership into an LLC. With an LLC liability is limited and an owner’s personally assets cannot be used to repay debts. With pass through taxation LLC members usually don’t have to pay taxes at a business level. LLC members can pass through any business income or loss to their personal income tax returns. An LLC offers more credibility when establishing business relationships with potential customers,Christian Louboutin Tall Boots, employees, vendors or new partners. Unlike a corporation an LLC has more freedom when organizing its business structure. An LLC has fewer restrictions than a corporation on ownership such as, who can own an LLC and how many owners the business can have.