Many companies will start out small, but with a little patience and a ton of hard work, you might decide to upgrade it into a corporation. One of the business entities that you might want to go for is a Limited Liability Company (LLC).
If you’re still on the fence in thinking about whether or not an LLC is a right path for your business, then read on to know some of the top reasons why you should just take the leap of faith.
Reason #1 – Less Paperwork and Procedures to Deal With
Running a business will always be an arduous task and sometimes forming it into a corporation can be even tougher. However, forming an LLC is simpler as compared to upgrading your company into a C or S-corporation. But before we proceed forward, know that most US states require you to pay a fee to form an LLC. Furthermore, you have the file the articles of organization and perhaps even make annual filings. While it might sound complicated and tiring at first, know there are a lot more paperwork and procedures to be done when you form a C or S-corporation. Also, the general fees in the formation of an LLC corporation are usually cheaper than creating other corporation entities.
Reason #2 – Taxes
No, your business isn’t going to be fully exempted in paying taxes. Instead, you’re going required to pay fewer taxes in comparison to C or S-corporations. By default, an LLC corporation is considered as a “pass-through entity.” In other words, it’s a business wherein the income gained and lost will go directly to its owners. In this type of setup, the filing and giving of tax returns will usually come with only a few hassles. You’ll still have to file a Schedule C to display all the revenues and deductions in detail and file a Schedule SE for self-employment taxes.
Reason #3 – Estate Planning
While other business entities won’t give you much flexibility on how you want to operate it, an LLC, on the other hand, can be placed in a living trust. In doing so, it can provide better estate planning and additional tax benefits for the firm’s owners and shareholders as compared to forming other forms of corporations. However, if you want to place your LLC in a living trust, note that this can be a very complicated topic and may require the assistance of a qualified attorney to get you out of any bind.
Reason #4 – Limited Liabilities
An LLC wouldn’t be called Limited Liability Company if it didn’t have limited liabilities in the first place. Furthermore, this is perhaps the biggest appeal to forming an LLC despite the fact that you can still get limited liability protection from an S or C-corporation as well. It generally means that you can protect the personal assets of the company if bankruptcy or litigation is in the midst.
The items on this list might not be thoroughly extensive, but these will give you a general idea on why you should just go ahead and form an LLC. If you need assistance, be sure to check out https://windsorcorporateservices.com/services/.