As you start a new business, you will have many commercial law options to choose from when it comes to the kind of structure to use. One of the most popular choices for small business owners is a Limited Liability Company or LLC, thanks to several advantages it offers over other business structures. 

Why You Should Start an LLC

1. Reduced Paperwork

Compared to other corporate entities, creating and running an LLC entails less paperwork and fewer requirements. As long as you operate within the scope of commercial law, it’s relatively simpler to maintain an LLC.

For example, LLCs don’t need to keep extensive records and have annual meetings like other corporations. Even though LLCs must file and pay annual fees, they generally don’t hold yearly shareholder or regular board of directors meetings.

2. Limited Liability for Owners

Limited liability means members will not be personally liable for debts incurred by the company. This safeguard doesn’t apply to a traditional partnership or sole proprietorship since creditors can still collect on business debts through the personal assets of the members.

Even if your business or your partner is sued, creditors can only go after the business because an LLC is a separate entity from its owners. However, owners can still be found liable for any violation of commercial law or any illegal act they commit.

3. Tax Advantages

In a standard corporation, double income taxation can occur since shareholders pay income taxes for their dividends at the individual level. At the same time, the profits of the corporation are also taxed at the corporate level.

On the other hand, LLCs have a pass-through tax entity status similar to those in partnerships or sole proprietorships. This means the company’s profits and losses simply pass through to the members’ personal tax returns. In effect, allocated profits are taxed just one time, and there’s no need to file a specific tax return for the LLC.

Start your business right with the help of the expert team from Donald L. Spafford, Jr., Attorney at Law, in Honolulu, HI. Count on their over 30 years of experience, professional advice, and high-quality legal representation when it comes to commercial law, debt relief, debt consolidation, and many types of business transactions. If you’re ready to get started with your LLC, call their office today (808) 532-6300 to schedule a consultation, or visit their website to find out more about their practice areas.