Is an LLC the Right Entity for your Start-Up?

If you are ready to start your own business it is time to start thinking about how you want to legally incorporate your entity. There are pros and cons to every type of legal entity, so it is important to confer with your business attorney to discuss each of them. One structure that works well for many businesses is the limited liabiltiy company (LLC).

1. Flexibility . The LLC structure provides beneficial qualities of a partnership and a corporation, and the end result is that it provides you with more flexibilty.
2. Simplicity . The LLC is a fairly easy entity to incorporate. In most jurisdictions you must file an Articles of Organization form and pay the applicable fee. You should also have an Operating Agreement that is signed by all of the LLC’s members. This contract between the members establishes their rights, percentages of ownership and share of profits.
3. Tax benefits . If an LLC has more than one owner, you can avoid double taxation. The entity will be treated as a partnership for tax purposes.
4. Owner protection . While no entity offers its owners 100% protection from liability, the members of an LLC are not held personally liable for the debts or obligations of the entity. Of course, members are still responsible for their own misconduct or negligent actions. Outside of these few exceptions, however, members of the LLC are only liable for the amount up to their capital contributions.