If you are starting a new business and you want to incorporate it as a separate legal entity, you should educate yourself regarding the pros and cons of the different available business structures. It is important to understand that if a business is not properly organized from the start, it can have costly consequences. If you want to save yourself time and money in the long run, contact us to ensure your business is properly organized.
One business entity you may want to consider is a limited liability company (LLC). Below are a few of the benefits of a LLC:
- Members (owners) enjoy limited liability
- There is no limit on the number or type of members
- Centralized management is available (in other words it can be managed by a Manager or President or other structure you want to set up)
- Profits from the business are subject only to one tax (at the individual member level)
- Members can use business losses to offset other income on personal income tax returns
- Unequal distributions can be made to members
There are some disadvantages to forming a LLC, including:
- Certain formalities must be met for organization and operation
- Your business must qualify to do business in other states
- Reporting to governmental entities may be required
- Member interests are not freely transferable with all rights intact
- Business profits are taxed as income to the individual members (which could result in self-employment tax or income tax, even if no distributions of income are made)
To learn more about creating a limited liability company or for assistance in determining what type of business structure would be most advantageous for your business, contact our business formation attorneys today.
The Astill Law Office has provided high quality legal services for over 30 years. We specialize in wills, trusts, estate planning, and asset protection. If you have any questions about creating a Trust, Will, or estate planning in general, contact The Astill Law Office at 801-438-8698.