As an entrepreneur or new business owner, you must decide the legal form of your enterprise. A tax attorney will tell you that operating as a limited liability company (LLC) offers several benefits. The following considerations are among those that may impact your decision.

3 Reasons Tax Attorneys Suggest LLCs as a Business Form

1. Limited Personal Liability

Forming an LLC offers protection against personal liability for accidents or debts involving your business. By creating an LLC, you establish a separate legal entity that limits your responsibility as an individual. Generally, this separation means you do not have a personal obligation to pay the company’s debts. Your risk is limited to the amount of capital you invested in the business. However, if you give a personal guarantee for a business loan or debt, breach your duty to the LLC, or are extremely careless in operating the business and a third party is harmed, you can be held liable.

2. Tax Benefits

With an LLC, you avoid paying income taxes twice. “Pass through” treatment, a feature of LLCs, means you pay taxes only once on your individual income tax return. If you form a standard corporation, you pay income tax on the corporate profits and pay income tax as a shareholder when you receive dividends. As an LLC owner, you should consult a tax attorney about the possibility of deducting 20% of your business income under the Tax Cuts and Jobs Act.

3. Maintain Business Independence

If you form a single member LLC, you can maintain your business independence as if you are a sole proprietor, but you have legal protections as if you are a regular corporation. With an LLC that has more than one owner, you enter into an operating agreement with the other owners to run the business. 

When you need to decide whether to run your business as an LLC, consult Lance S. Cox, Attorney At Law. Based in Cincinnati, OH, this probate attorney has more than 30 years of experience as a tax attorney, and in estate planning and probate. Get the help you need to start and grow your business, and achieve long-term financial success. To schedule a consultation, complete the contact form on his website or call (513) 528-6000.