LLCs have become an extremely popular business structure in recent years. Compared to other types of entities, LLCs are relatively new. They started in Wyoming in the late 1970s. With thousands of new businesses forming every year, one of the most common questions startup lawyers answer is, “Should I form an LLC?” Here are five reasons business owners love LLCs, and why small business attorneys often recommend them.
1. Limited Liability
The two Ls in LLC stand for limited liability. Essentially, by having an LLC, a business can separate its assets from the individual owners’ assets. Through limited liability, business owners can protect their personal wealth if the business does not do well.
2. They’re Cheap
What does this liability protection cost? Generally: not much. The government fee for organizing an LLC varies from state to state. But in Virginia, the fee is only $100, which is pretty inexpensive for the amount of protection an LLC can provide.
3. Not Taxed Twice
People have complained for years that corporations are “double taxed.” The corporation is taxed on its earnings. And the shareholders are also taxed on their dividends. But LLCs can avoid this problem. An LLC is what is referred to as a pass-through entity. The IRS essentially ignores the entity, avoiding double taxation.
4. Easy Filings
Corporate filings can become quite complex. LLCs tend to have far simpler filings that can be filled out quickly. Small businesses (and businesses of all sizes) really tend to like the easier form.
5. Flexibility
Much of what happens in an LLC is up to the owners. Owners of the company can make an operating agreement and this agreement can define the purpose and function of the company as well as the duties of the owners.
To summarize the benefits, LLCs offer great flexibility and asset protection at a very reasonable price. If you are interested in an LLC, contact an experienced small business attorney and see if an LLC is right for you. Schedule a consultation with Jabaly Law for help navigating your options.
