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The Curious Bag
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A Limited Liability Company (LLC) is a type of business structure that you set up through your state government. Most businesses can be an LLC, except banks and insurance companies.
Limited Liability
As stated in the name, an LLC provides the member owners protection from liability. This means that you are not personally liable for business debts or lawsuits against the business.
Choice of Tax Situation
Limited Liability Companies are not recognized for filing federal taxes by the IRS. You can choose whether to file as a sole proprietorship, partnership, S corporation or corporation. This offers you the ability to choose the best tax option for you.
No Double Taxation
If you choose any of the options besides corporation to file taxes, you will pass through your profits or losses to your personal return through a Schedule K-1. This means you avoid paying taxes on the corporate return.
Flexibility
An LLC can be owned by an individual person, a group of corporations, foreign entities or even other LLCs.
No Annual Meetings
Unlike a corporation where annual meetings with formal minutes are required, in an LLC you do not have to have annual meetings.
Source:
IRS.gov: Limited Liability Company (LLC)
SBA.gov: Guide to Choosing Your Business Structure
Business.gov: Registering Your Business
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