The Benefits of Forming a Business as a Limited Liability Company
There are several options for business organizations, each of which has its unique merits. The type of business organization you choose for your company shapes taxation, potential legal issues, and other aspects of the business. Our Monroe, LA attorney is here to help you determine which business type is best for your company. Let’s take a quick look at why so many Niswanger Law clients form businesses as LLCs.
The Advantages of a Limited Liability Company
Form your business as an LLC, and you will have a legal shield against actions taken against your business to obtain financial compensation. The business’s debts and legal judgments will be distinct from your own personal finances and legal affairs. This legal protection is by far the most popular reason for forming a business as an LLC. LLC formation provides the business owner with legal protection against current and future liabilities, including judgments handed down by Monroe LA judges.
LLCs are also favored for taxation purposes. Individuals who own the entirety of a Monroe LA business can form a one-person LLC. This entity is taxed similar to a sole proprietorship, meaning it is beneficial in that the owner can receive compensation through the distribution of profit that has the potential to be taxed at a reduced marginal tax bracket as well as the pass-through of losses relating to the business, ultimately offsetting income stemming from outside sources.
An LLC for a business with more than one owner provides tax benefits along with additional advantages. For example, the business owners can choose the LLC to be taxed as a corporate entity as either a C corporation or an S corporation. For a C corporation in Monroe, LA, the corporate tax rate is typically less than that for the business owner’s personal marginal income tax rate. Furthermore, if any business owners would like to receive financial compensation, W-2 wages or a salary can be paid for work relating to the business.
LLCs are Also Favored for Their Enhanced Flexibility
Form an LLC, and you will be able to choose between the business being managed by a member (meaning owner) or a manager. Such flexibility empowers you to select the optimal structure for your specific company based on its unique strengths, weaknesses, potential future path, and other idiosyncrasies. A member-managed approach is ideal for small businesses in which the owner wants daily involvement in the business. Alternatively, an LLC managed by managers is optimal for business owners who don’t want to be involved in the business’s day-to-day operations.
LLCs are also flexible in the context of profit sharing. LLC owners determine profit-sharing following the guidance outlined in the operating agreement. However, there is room for flexibility that proves mutually beneficial for all business owners. Whether you want to restrict profit payouts for solvency purposes or if you want to alter profit sharing to reflect the work put in by a specific owner during a recent financial quarter, you are perfectly free to do so thanks to the flexibility of the LLC business structure.
Niswanger Law is on Your Side
Our Monroe LA attorney is here to help with your business’s legal challenges. If you consider forming an LLC or have another business law matter, reach out to us today. Our legal guidance will help your business fulfill its true potential, prevent legal problems across posterity, and ultimately add to your bottom line. Call us today at 318.953.0071 to schedule a consultation.
