Forming an LLC corporation can be a great advantage to many businesses, when they are looking at introducing a system of running their company. An LLC stands for Limited Liability Company and has components of both corporations and partnerships, so that the management of your company under an LLC remains flexible, while at the same time enjoying the protection offered by corporations.

The advantages of running your company as an LLC, will be firstly, that the LLC does not have heavy tax laws applicable. The second is that the personal assets of each member are protected from any lawsuits, third is that the management structure is flexible, fourth is that record keeping is simple, fifth is that there are flexible profit and losses allocations, sixth is that the expenses are deductible, and last but not the least, is that it is nationally recognized. We will look at more of these in more detail.

The LLC has pass through taxation laws which means that if the LLC has one owner, the Internal Revenue Service (IRS) will treat it as a sole proprietor. If there are many owners, then tax deductions are that of partnerships. This means that the owners report their share of the losses and profits of the company which they place on their personal tax forms and the company itself will not be taxed separately. You can however, also choose to file your company as a corporation and pay those taxes.

The limited liability means that your personal assets cannot be used for leverage in any lawsuit against your company. This advantage stems from the corporation side of the LLC, and is the reason for the name. This is also true for any debts that the business incurs.

The flexible management structure means that unlike a ‘C’ corporation, the founding members do not have to be citizens of the country or even have a permanent residency. The LLC may also have as many owners as they like, which is unlike the ‘S’ corporation (only limited to 100 members). The LLC can also choose to be managed by the owners directly or they can hire a manager to do this for them.

The record keeping is very simple because the LLC does not have to hold any annual meetings and take minutes which need to be accurate and submitted for review. There does however have to some form of operating agreement in place stating each person’s role in the company and who will manage it.

There is flexibility when it comes to profits and loss allocation among members. Unlike a corporation where each person contributes according to the amount of shares they hold in the company, an LLC allows members to decide how to split the expenses and profits according to nay system they like.

The deductible expense is basically referring to the owner’s salary, which can be deducted from the profits before the remaining amount is divided among everyone else.

The final advantage of an LLC is that it is nationally recognized business structure, meaning that wherever your business is, you can take advantage of the many benefits, especially for new businesses.

The LLC structure of business stands for Limited Liability Company and can provide small business owners and others with the flexible management of a partnership and pass through taxation laws with the professionalism and benefits of a corporation. Many companies choose this method over the ‘C’ and ‘S’ type business structure for a number of reasons, but here we will be looking at specifically the difference between LLC and ‘S’ type corporation. 

LLC Vs S Corporation Differences

The subchapter ‘S’ corporation and LLC are similar in the fact that they both have pass though taxation laws, which means that the company is only taxed on losses and profits that each member pays through their personal income tax. The company itself is not taxed as well.

The differences come however, when looking at the smaller internal details. The first difference where the LLC has the advantage is that an LLC is much easier to form. The filing of this type of structure means that each member is automatically filed as a sole proprietor. The company can however elect to be filed as a corporation to take advantage of the lower tax rates. 

The next advantage of LLC over the S Corporation is that, LLC companies do not have to file any minutes or have annual meetings, as you would have in an ‘S’ corporation. Record keeping is not a formal requirement of an LLC. The LLC also does not need to have members that are US citizens, like in a strict ‘S’ corporation.

In the ‘S’ corporation the owners have to issue shares in stocks to prove the ownership, which can be a hassle and take a lot of management, but the LLC does not need this to be done. There is also no limit to the number of members that an LLC has as in an ‘S’ type corporation, where you are only allowed to have up to 100 members. This also means that members do not have to be penalized or benefit from losses and profits of the company due to the amount of shares that each member holds. This can be distributed in any way that the owners of an LLC agree on. 

With so many benefits of applying for an LLC, especially if you have a small business, or you have just started a business, it is easy to see why it is so popular. In this way, all of the owners benefit from lower taxes and higher salary checks, as well as the employees, so that they will remain loyal to the company. 

The only restriction comes in terms of the formal paperwork, when you have to file all of your internal records, files, and agreements properly, and make sure that your tax forms are in on time. You also have to make sure your tax payments are kept up to date otherwise it is possible for the Secretary of State to revoke your LLC. 

You can apply for your LLC online and in less than 10 minutes you can have approval to start your business structure, and save money while building your company.

When you decide to form an LLC, one of the most important reasons is to benefit from the taxations that are in place for this kind of business structure. The LLC is the Limited Liability Company, as does exactly as the name suggests. It limits the liability that one would normally have in a partnership or if you are a sole proprietor. Your company can still be run as flexibly as you would like, but the members will not have to worry about their personal assets being brought in to any lawsuits.

The tax benefits are easy to understand. Firstly, an LLC is not subject to double taxation laws like a corporation, where usually the profits will have to be subject to taxes as well as the shareholders’ dividends. This can help smaller companies who are growing and would like to run as a corporation to save more of their money and grow even faster.

The LLC members can also decide to be taxed according to the main entities that make up an LLC, namely a sole proprietor, partnership, or a corporation. The taxes that are due can also be deducted only on the expenses and losses of the company, thus lowering the taxes. The taxes can also benefit the members and employees, because they allow the use of self employed retirement plans, instead of the larger ones used in corporations.
 
With an LLC, you can make sure that you are getting the amount of money that your company deserves without the heavy taxes and payment plans. There is a lot more freedom of management, but with the structure of a corporation, so everyone remains happy. The taxes for LLC formed companies must be in on time and payments must be up to date, otherwise it is easy for it to be revoked by the Secretary of the State.
 

Besides the tax benefits that you get from registering an LLC, you can also have the satisfaction of knowing that your business can be run the way that you want it to be. One of the perks is that the owners are allowed to deduct their salaries before they distribute the remaining money between the employees. Another benefit is that the members are not restricted by the amount of shares that they hold in the company. Any expenses and losses that are incurred can be split among the responsible persons and settled any way that the company decides. Another important aspect is that employees and managers can have any kind of agreement set in place for protection of their personal assets and they do not have to have set annual meetings with submitted recorded minutes, as long as all internal paperwork is kept up to date.

So whichever way you decide to register your company, you can be sure that with an LLC, you will benefit the most from both sides of the table. This formation is especially beneficial to newer companies who struggle with high taxes and double taxes. With the way the tax is structured in an LLC, the company can expand quicker, pay their employees more thus gaining their loyalty, and therefore become more successful.

Why Set Up a LLC?

LLC stands for Limited Liability Company and many businesses choose this option because it combines a partnership with a corporation. The tax advantages that you get from a partnership, along with the flexible management makes this popular and it has the liability protection that you would find in a large corporation.

The main features of the LLC are that if you are a sole proprietor or are in a partnership, you can benefit from the taxation only on the expenses and losses of the business. You are also protected from lawsuits on personal property, just like any member of a corporation. 

The flexibility comes in because if you have an LLC, you do not have to be permanent resident of the country or have citizenship. The LLC may also have as many owners as you want and the management of the LLC can be taken over by the manager or directly by the owners. 

The LLC makes it simpler for owners to run business, as you do not need to hold any annual meetings or draft minutes of meetings for record keeping. You will just need an agreement to state who and how the company will be managed.

Deductible expenses are allowed in an LLC, which is the same as is done in a corporation. The owner’s salary is allowed to be taken from the profits before the rest is distributed between the remaining employees. Unlike a corporation though, the profits and losses can be allocated in any way between the company members, and not according to specific share percentages that each person holds.

Forming this type of structure for your company can have super benefits that can allow you to have the best of both worlds. You can have a huge amount of freedom in the way the business is run, but it can still hold the same professionalism and structure of a corporation.

The taxes that are involved in having an LLC are beneficial to the member and the company because there are no double taxes like in a corporation, where they tax the profit as well as the shareholders dividends. The members of an LLC can choose the form of taxation that they want. If there is only one owner, then the taxes will fall under a sole proprietor. If there are multiple partners then it will be considered a partnership, but you can also choose for it to be filed as a corporation.

To ensure that your LLC remains in good standing, you must make sure that all the taxes due are paid and up to date. If the annual compensations are not paid, then the Secretary of State can decide to revoke the LLC. The initial registration of the LLC and licensing of it can help the members to protect their assets, by submitting a signed agreement from all parties concerned to the State. Internal records must also be up to date and filed for further reference and so that assets of individual members can be protected.