If you are trying to establish yourself as a start-up, you need to answer the question, “What is the purpose of an LLC?” before you register your business. Doing so will give you the information you need to create a solid foundation for your new business.
An LLC offers a number of advantages for the business owner – benefits that should not be overlooked.
Table Of Content
|1.||What Is the Purpose of an LLC for the Small Business Owner?|
|2.||What is the Purpose of an LLC for Multiple Business Owners?|
|3.||What is the Purpose of an LLC for property investors?|
|4.||What Happens Next?|
While it is easy to set up a sole proprietorship, you don’t enjoy the same protection as you do with an LLC. That is because a sole proprietorship leaves you vulnerable, or open to more law suits.
Because a sole proprietorship is not distinct from what you own personally. If someone sues your business, they can also come after your personal assets. When you file an LLC, you can avoid this from happening.
What Is the Purpose of an LLC for the Small Business Owner?
When you answer the question, “What is the purpose of an LLC?” as a small business owner, you will quickly see the advantages. An LLC benefits a small business proprietor in the following ways:
- An LLC allows a sole proprietor or business owner to enjoy protection from current or future liabilities against their business without the need to incorporate.
- LLCs offer considerable tax benefits, especially if an LLC is established in Wyoming, Delaware, or Nevada.
- If you are a sole business owner, an LLC can be taxed as a sole-proprietorship, as the entity features pass-through taxation. In turn, you can claim profits on your individual tax form at a lower tax rate.
- Business losses pass through to the owner’s individual tax form, thereby offsetting an owner’s non-business income.
As you can see, you can receive pass-through taxation and the allocation of business losses on your personal tax form while enjoying personal liability protection. You don’t have this type of flexibility if you choose to remain a sole proprietor.
What is the Purpose of an LLC for Multiple Business Owners?
Now that you see the benefits of establishing an LLC as a sole business owner, you may want to get the answer to the following question, “What is the purpose of an LLC for multiple business owners?”
The benefits for this type of set-up should also be reviewed at length, as this type of LLC offers a good deal of flexibility. Contact me so you can further explore how you can benefit from this type of business set-up. Email email@example.com today.
For a business that is a partnership or has more than one owner, an LLC offers several tax advantages, plus the benefit of a establishing a corporate tax strategy. For instance, if LLC members do nothing but allow the LLC entity to stand as it is, the LLC will be taxed as a partnership.
However, you can elect to be taxed as a corporate entity – or as an S corporation or a traditional C corporation. For example, maybe you want to keep your business profits in the corporation.
If so, you should elect to have your LLC taxed as a C corporation.
Under this election, your LLC’s profits are only subject to a 15% tax rate, which is typically lower than the personal and marginal income tax rate. Should any of the members wish to be paid a salary, you can pay them W-2 wages for their work.
On the other hand, LLC members may want to have a bit for flexibility. For instance, if one of the members wishes to take part of the business profits, you should choose to give your LLC S-corporation status.
By using this tax approach, an LLC member can receive a pro rata share of the LLC’s bottom line, with the amount recorded on the member’s individual tax form.
- The LLC can have more than 75 owners.
- A nonresident of the U.S. can act as the LLC’s owner.
- The owner can assume over 80% ownership in a separate incorporated entity.
- Owners and members can participate in the management of the business.
- A corporation or partnership can serve as the owner.
Given the business climate that small businesses must weather today, it makes good sense to set up a business as an LLC. Therefore, establishing an LLC with one owner as a sole proprietorship, or as an S corporation or C corporation, when there is more than one owner, provides some major tax benefits.
Plus, setting up a small business as an LLC is much easier than incorporation. However, that does not mean you won’t need legal guidance and help. It just means that you can enjoy the benefits accorded to a corporation without the complexities.
Would you like to know more about establishing your business as an LLC? If so, you only need to contact one of the members of my legal team or myself.
Book a call to speak to us here: https://mollaeilaw.com. Learn more how you can set up your business so you can enjoy some operational and tax advantages.
What is the Purpose of an LLC for property investors?
While an LLC is an ideal entity to establish for a small business, you cannot leave out the advantages for people who invest in real estate. Therefore, it helps to know the answer to the following, “What is the purpose of an LLC for property investors?”
In basic terms, the establishment of an LLC for real estate investors makes it possible to invest in real property while enjoying personal liability protection. Therefore, a real estate investor can buy and sell properties as well transact business as an LLC.
By taking this approach, an owner who invests in several properties can protect his or her assets from both personal and business lawsuits. By creating an LLC for each property, a litigant can only go after one property at a time.
As you can see, you have a great deal of flexibility when you choose to establish your business as an LLC. If you want to expand your business and protect yourself against personal liability, an LLC provides you with the means to establish your business goals and dreams.
What Happens Next?
If you are still asking, “What is the purpose of an LLC?” you probably need a more in-depth legal interpretation of the benefits associated with establishing this business entity. Email firstname.lastname@example.org for more details today, and to set up an appointment for a consultation.
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