Basically, a limited liability company, or simply LLC, was created to accommodate some of the needs of businessmen that cannot be answered by creating a corporation or a partnership. Hence the creation of an LLC. So if the question to be asked is what solutions an LLC provides, the obvious and immediate answers would be the solution that the other forms of business structures cannot.
An LLC is a form of business that is neither a partnership nor a corporation but has the features of both. Like the corporation, an LLC gives its owners limited liability. Like a partnership and sole proprietorship an LLC passes through its profits or losses to its members for taxation purposes. So what solutions an LLC provides given that benefits? Because of the mentioned features, the LLC manages to give businessmen the best of both worlds. It solves the taxation problems that a corporation has while it protects its owners from personal liability which a partnership and sole proprietorship cannot do.
Forming a limited liability company comes with it many advantages. These advantages are considered such since they help solve more business difficulties. What solutions an LLC provides based on these advantages and what solutions an LLC provides to its members? An LLC provides its members flexible distribution of profits. This gives them the freedom to do as they please with their profits. LLCs also solve the problem of many corporation when it comes to formalities and documentary requirements as well as higher incorporations fees. This is because LLCs only require basic requirement and fees much lesser than that of a corporation.
What other solutions an LLC provides? One of the most attractive things a limited liability company can do is solve the problem of double taxation that most corporations hate paying for. With an LLC, the corporate tax usually paid by a corporation need not be paid along with personal taxes. All that has to be paid is the income tax of its members.
It is knowing what solutions an LLC provides that has made them the more popular form of business structure for the last ten years. The benefits they can offer are more custom fitted to the business that a lot more people want to have. Aside from the above mentioned advantages, a big number of other attractive features can still be said about LLCs. The LLC’s pros are much more than its cons. An example of this is the asset protection it provides which makes possible the adage that “you own nothing but you control everything”. It is advantageous to estate tax planning as well as in eliminating probate, it gives creditor transactional benefits, fund raising and charitable giving is facilitated better through the forming of an LLC and multiple states operations and professional practices are both better enhanced via an LLC.
Now that you know what solutions an LLC provides, it will not come as a surprise if you become one of the wiser ones who will prefer to make use of it when forming a business. A lot more vital and useful information can be gained via the internet about limited liability companies.