LLC or Limited Liability Company is a hybrid business model that combines the limited liability features of a corporation and the operational flexibility of a partnership. It’s a new business structure that combines sole proprietorship, partnership, and corporation altogether.
People who are involved in an LLC are called as “members” instead of “business partners.” It’s a small business set-up that allows members to benefit from the business. Similar to a partnership setting, an LCC reports their profits and losses on individual taxes returns.
What are the Benefits of LLC?
1. The LLC owners have a choice whether they’d like the IRS to tax them as a sole proprietorship or a corporation. Sole proprietorship has higher taxes, but you can decide if you’ll take an individual or corporate identity. A corporation, on the other hand, has lower taxes but the IRS charges them in a corporate and personal level.
2. An LLC protects their members from personal liability, making them safe from debts and financial issues. The assets are the only ones at risk when it encounters legal issues. In short, it doesn’t force the members to pay or give up their personal resources.
3. LLC’s organizational structure allows you to have more control in your business. Instead of waiting for the shareholders to come up with a decision, a managing member can act as the representative.
How Can You Form an LLC?
1. Forming an LLC is typically the same when starting up a business. Decide where you want to register, as states have different regulations when starting an LLC. It’s also possible to file an LLC online.
2. Think of a unique business name that complies with the state’s rules. It shouldn’t be the same with any existing business. The name should also end with an LLC designator, such as LLC, L.L.C., or Ltd. Liability Co.
3. Look for a registered agent who can be your representative. Their duty is to file your requirements and make sure that it goes well.
New business structures are available to anyone who wants to start a business. Contact a Delaware LLC to get started.