The structure you choose for your new business will determine everything from its tax obligations to your standard operating procedures. Determining whether a sole proprietorship, partnership, limited liability company (LLC), or corporation is best for your needs will depend on a variety of factors. If a business lawyer determines that more than one of these structures will work, here’s why opting for an LLC is beneficial. 

What Are the Benefits of LLCs?

1. Asset Protection

Sole proprietorships and partnerships expose your personal assets to creditors, but limited liability companies provide extra protection by separating personal and business endeavors. LLCs are essentially their own financial entities, so the organization’s debts are not the owner’s debts. Likewise, your assets are not considered the organization’s assets, and therefore don’t need to be forfeited during bankruptcy. 

2. Tax Advantages 

An LLC’s earnings are subject to “pass-through” taxation, which means they're only taxed once. The Internal Revenue Service (IRS) does not tax LLCs directly. Instead, the organization’s income passes down to the owners, who then pay personal income tax on their profits.

By contrast, a corporation’s earnings are essentially taxed twice. The corporation must pay taxes on its earnings, then the owners must pay taxes on their incomes. Before registering as an LLC for the tax benefits, however, consult a business lawyer to confirm that your operations meet the IRS’s requirements. 

3. Operational Flexibility 

Unlike corporations, LLCs do not have boards of directors. This allows the owners to maintain their autonomy from day one. If you operate an LLC, you won’t have to follow strict policies handed down by officers who may not necessarily be familiar with the day-to-day operations of your business. You will also maintain control over the organization’s profit distributions. 

For help establishing your LLC, turn to the business lawyers at The Law Office of W. Randall Holcomb. Operating out of Greensboro, NC, this firm is well-versed in business law. Their knowledgeable team will work with you to find the best designation for your new company, then help you deal with business litigation and workers’ compensation. Visit their website to explore their practice areas, or call (336) 888-8760 to request a consultation.