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Business Law 101: The Benefits of Organizing as an LLC

by | Jul 14, 2019

Choosing the right model for your business plays a huge role in its financial success. Your choice also dictates your liability should anything go awry, and how your business is regulated. For those reasons, thousands of new business owners opt to establish themselves as a Limited Liability Corporation (LLC).

Many business owners choose to register their new businesses as LLCs instead of S-Corps. While Limited Liability Corporations and Subchapter Corporations are very similar, they do embody subtle differences that make an LLC more appealing to many business owners. Here are 4 of those reasons:

Less Paperwork

LLCs are easily the most flexible form of business model. Regulations governing the rules of operations and compliance are minimal, so there is typically less paperwork to be filed to prove compliance. Most LLCs are regulated by the default rules of your state.

Limited Liability

As the name suggests, LLCs allow the business owner to face limited liability in the event that something goes wrong. For instance, if an LLC is sued, the owner’s personal assets are exempt from litigation.

Fewer Formalities

Unlike S-Corps, LLCs aren’t subjected to some of the more rigid formalities such as creating bylaws, issuance of stock, holding regular shareholder meetings, or keeping recorded minutes. While it’s a good idea for any business to establish an operating agreement and document all large company changes, it is not a requirement.

Tax Differences

While all other established businesses must file a corporate tax return, an LLC is only required to file a business return if there is more than one owner. LLCs with singular owners are permitted to file their business profits and losses along with their personal return. How a business is treated for tax purposes is often detailed in the company’s operating agreement.

While each type of organization has unique benefits, it is highly recommended, if your business structure allows it, that you form an LLC to maximize your overall flexibility and limit your own, personal financial liability.

If you need help deciding which business model is best for your company, The Campbell Law Group can help. We have years of experience helping business owners start and change their business structures. Let us help you make a decision now, that will benefit you for years to come. Visit us on the web at www.campbelllawgroup.com or call us at +1 (305) 460-0145 so we can get your business started today!

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