If you’re starting a new business or watching your existing company grow, you may be wondering if it’s time to consolidate into a limited liability company. Although there is a fee for the initial corporate filings Cleveland OH that gives some owners pause, structuring the company comes with key benefits for you and your business.
Once the entities have come together to form the LLC, they are individually shielded from liability exposure related to the business’s product or service. This means that owners’ assets are not subject to forfeiture to pay any judgments made against the company.
Because the IRS doesn’t have a set requirement for how an LLC is taxed, the owners who form it can choose how they will pay the government according to the best advantages the setup confers. The owners can choose to pay corporate taxes or can report earnings and losses individually depending on what’s best for the owners.
The company can choose to have any combination of partnerships, sole proprietorships, or even trusts and corporations, which can all become part of the LLC. This broadens the type of investors in the company and also financially diversifies the members.
An LLC can be managed among the members rather than relying on a single person’s judgment like a sole proprietorship. The owners also have more direct influence than a corporation, where a board of directors is charged with overseeing business decisions.
Because an LLC becomes its own entity in name, the company’s reputation is not dependant on any one member. This means the company can be shielded from the fallout of personal scandals of any of the members, ensuring the endurance of the business’s good name.
There are many ways to form and grow a company. While forming an LLC isn’t right for every business model, the advantages are attractive enough to make it the choice for many.
