A Limited Liability Company is a legal business company that provides limited liability protection to its owners. A limited liability company (also known as LLC) is created when proper articles of organization (or the equivalent under the laws of a particular state) are filed with the proper state authority, and all fees are paid. An LLC is very similar in structure to a corporation, except that the liability of the owners is limited — hence the name. An LLC is a combination of some features of the corporation, some of the sole proprietorship and some of the partnership.
The LLC is a relatively new innovation in the United States, intended as a way to help small businesses gain many of the benefits enjoyed by corporations, while allowing them to retain their small business model of ownership.
In an LLC business is done in the name of the company, not in the name of members individually. For small businesses which are owned by one person, the tax benefits of being a sole proprietorship outweigh the liability-reducing benefits of incorporation. By becoming a limited liability company, however, small businesses retain many of the perks of being unincorporated, while reducing their liability. The limitations of liability are, of course, very important and are the primary reason most small businesses choose to become an LLC.
The essential advantage of a limited liability company is that it provides pass-through treatment without taxation at the entity level while at the same time shielding members from personal liability. The profits of the company are taxed personally at the individual level and not at the company level. Unless they personally guarantee them, the members are not liable for the contractual debts and obligations of the limited liability company.
Being a business owner, you are more likely to be sued then you would be otherwise, so you can use an LLC to shield your personal assets from a lawsuit against your company. Members of an LLC cannot be held personally liable for the debts of the company. So just like a corporation you as an owner can use an LLC as a form of protection for your personal assets. Anyone starting a new business must separate their personal assets and life from their business ventures. A limited liability company is personal protection in its purest form.
Financing Your New Business
Once you have set up your LLC, you will want to immediately begin building your business credit profile so that you can obtain credit under your new business name, get business lines of credit, and begin applying for business credit cards. Remember, for asset protection you must keep your business separate from your personal. That includes your business credit profile.
An LLC is a separate legal entity having the power to conduct business, acquire, hold and dispose of property, and sue or be sued in its own name. A limited liability company is superior to other business entities for tax reasons alone. In short, we can say that a limited liability company is simple to form and easy to run. What most people gain that form an LLC is flexibility. The protection you receive by setting up a limited liability company is worth the little paperwork and time involved to set it all up.
To learn how to get business credit, you can purchase the new e-Book by Susan Carter. This document contains step by step instructions on how to build your business profile so that you will have access to funds you can use for day to day operating expenses. You don’t want to use your personal credit to finance your business because this exposures you and takes away the protection that is being offered by your LLC.
When you purchase my new eBook you will get a 21 page Free Credit Restoration Guide that contains 13 specific letters that clearly state the FCRA (Fair Credit Reporting Act) rules. Begin to use the laws that are already there to protect you and to clean up your personal credit if you have issues. This is a limited time offer, so don’t wait.