Limited Liability Company Lawyer in Greenville, SC
As a small business owner, ensuring that your company and assets are protected from risk is important. Registering your entity as an LLC, or Limited Liability Company, allows business owners to get started quickly with limited tax burden. LLC’s are a good method for divesting personal and business assets. Discussing the advantages and disadvantages of an LLC as a business entity is important, and our business lawyers in Greenville, SC can help you with this decision.
What is an LLC?
A limited liability company (LLC) is a corporate structure in the United States whereby the owners are not personally liable for the company’s debts or liabilities. Limited liability companies are hybrid entities that combine the characteristics of a corporation with those of a partnership or sole proprietorship. Like a partnership, the LLC has elements of being a pass-though entity for tax purposes, which essentially means that members can be taxed once on any profits to the LLC, as a form of personal income (unless they elect otherwise in the Operating Agreement).
An LLC is typically governed by an operating agreement that describes individual member responsibilities, operating procedures, governance, and any other business and legal structures that may be required. LLCs are afforded a generous amount of flexibility as it relates to structure, which indicates that the operating agreement is extremely important. In an operating agreement, members can determine tax structure, member rights, and a variety of other options related to the needs of the business. Different from bylaws for a corporation, most states do not require LLC’s to have an operating agreement. Oftentimes. single-member LLCs will choose to conduct business without an operating agreement.
Advantages of an LLC
There are a variety of different advantages to establishing an LLC. Below are just a few of the benefits:
- No Double Taxation. Due to the fact that companies are not taxed on profits, dividends that are disbursed to members are only taxed once.
- Less Paperwork. LLC’s require substantially less than other entity types to remain in good standing. This essentially means that there are less compliance loops to jump through.
- More Flexibility. Every aspect regarding an LLC can be manipulated to a business owners requirements. With a customized operating agreement, your corporate lawyer in Greenville, SC can establish a specific set of rules that govern your company. This means that LLCs are extremely scalable and simple to adjust with changing corporate realities.
Disadvantages of an LLC
LLCs also have a couple critical disadvantages. Two of the most crucial to keep in mind before choosing an LLC are as follows:
- Less Attractive to Investors. For the most part, investors tend to prefer C-Corps, this is because of the predictable structure and how simple stock distribution can be done. LLCs are not able to issue stocks, which indicates that becoming a member is typically more time intensive. For businesses that intend to be publicly traded, LLC may not be the most effective starting entity type.
- Higher Personal Taxes. Although LLC’s help to avoid double taxation, LLCs are often-times taxed as pass-thorough entities, which indicates that members are potentially responsible self-employment taxes personally.
The Law Office of James Stone Craven corporate or startup lawyers can assist business owners in deciding if an LLC is the correct entity type for your business.