Turn that New Business Into an LLC | cheap auto insurance in florida
With many companies closing shop there is an increasing trend of people starting their own businesses after previously holding regular jobs. Whether you have just started your own venture or still planning to do so, you may want to hear about the benefits of becoming an LLC.
LLC, or Limited Liability Company, is a type of business organization which is becoming very popular because of the benefits that it provides the owners.
During start-up, defining your organization type as an LLC is easier than setting it up as a sole proprietor. It is even possible to convert your organization into an LLC even if it?s already been previously set up and defined as another type of business organization.
If you have established your business as a sole proprietorship, it may have been done simply by filing a DBA (doing business as) form in your locality. You may not have had to register your business with the state. An LLC is one of the forms you can choose when registering your business.
There are advantages and disadvantages when choosing to start your company as an LLC, but the most important advantage is that it provides protection from liabilities to the owners. An LLC may borrow money for example, yet the owners would not be held liable for it in the event the business fails. The owners cannot also be held legally responsible should the business be taken to court for whatever reason.
Other benefits include pass-through taxation, which means owners still claim income or loss on their individual income tax returns; improved credibility with employees, creditors, etc.; fewer ongoing formalities and restrictions than corporations; and flexible management. Unlike corporations, LLC?s are not levied business taxes, does not have a board of directors nor does it convene board meetings.
The disadvantages of starting an LLC lie in the legalities and fees. To form an LLC, Articles of Organization have to be filed and filing fees paid in the state in which you register your business. Some states even call for annual report or franchise fees. These are free however for sole proprietorships and general partnerships and is reasonably-priced for small businesses. Ownership of an LLC is often harder to transfer because there is no stock to be sold and all owners must agree to any changes.
While you may set up an LLC with only one owner in some states, others will require at least two partners. Another disadvantage is a requirement for the payment of self-employment taxes, something you would have to do if an LLC becomes your only income anyway.
To save themselves the hassle, many people who wants to form an LLC resort to hiring lawyers for handling the legal requirements. Forms are also downloadable from the internet for those who are secure enough to comply with the process by themselves. If doing the work yourself, be sure to find forms that comply with your state and research any special requirements you may need to meet.
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