How Small Businesses Can Be Either LLCs Or Corporation
American business entities can have one of many different types of legal structures. The size of one’s company does not define the type of legal structure chosen by the business owner. For instance, there were 27.9 million small business in the United States in 2010 alone, but not all of these businesses worked under the same legal structure.
If the size of a business doesn’t determine their legal structure then what is an LLC? An LLC, or limited liability company, is one type of business entity that allows the business owner to have fewer tax difficulties with the same legal protections a corporation would have.
So how do you determine whether or not you should be forming an LLC or starting a corporation? It all comes down to what you would like covered and protected by the law.
LLC Vs Corporation And The Small Business Owner
There’s a reason why LLCs are often presumed to be small businesses. This is because it’s typically easier for a small business that has a limited number of owners for an unlimited amount of time. For instance, family businesses where the business is intended to pass down from the parent to the child over a period of time may find running an LLC to be an easier legal choice.
However, an LLC may not be the best choice for every small business either. It may be a better idea to start your business as a corporation if you have multiple people buying stock from your company or if you have outside investment offers.
Benefits Of An LCC
There are many benefits of being a member of an LLC. Benefits include protection of the business owner’s assets should a fault result in a lawsuit, a more relaxed requirement for tax filing, and the ability to file for business taxes on one’s own personal income tax return.
It may be a challenge to convert your business to an LLC if your business isn’t being built from scratch. However, this is also determined by the state in which you are converting your business to an LLC. Fortunately, the challenge of converting to an LLC is predominantly found in the transferring of assets from one type of legal entity to another.
Many businesses in their beginning stages tend to use the benefits of an LLC because of the legal precautions that exist. LLC advantages also allow for the running of your business without the hassle of tax and financial burdens. If you are considering starting an LLC, contact My USA Corporation for more information today.