Limited liability companies (or LLCs) are very attractive for early start-ups. Not only does it avoid double taxation, but it’s also easy to get started.
Despite the protracted effects of the Great Depression, people are more optimistic about the country’s general business environment. Still, much of the wealth generated has not spread to the country’s poor and mid-level. Nonetheless, more than 27% of those surveyed believe that economic conditions are good or good. There are many reasons to use Limited Liability Corporation (LLC) for start-ups, but here are five.
- Avoid double taxation
SMEs often create the best LLC services, depending on how the business is established and the number of employees. This is because it avoids double taxation and can support multiple share classes as needed. This will allow the company and the owner to pay taxes separately in April. LLCs are taxed like a single owner and avoid this. This is especially useful if you are using a start-up accelerator. You can convert LLC to an enterprise at any time later with a fairly simple process.
- You can choose the location of the LLC
The cost of establishing an LLC depends on the state in which the LLC is established. Regardless of cost, it generally makes sense to set it up while you’re working.
- Easy to change
Another advantage of the start-up LLC structure is that once set up; it does not require much continuous maintenance. Perhaps most importantly, you can easily add new partners or sell your interest in an entity to others. This is more relaxed than C-Corp’s business structure, which takes minutes to make board decisions. LLCs generally have fewer restrictions on many management elements compared to other business structures.
- You can protect your assets
Many start-ups are creating LLC structures to protect their personal assets from business proceedings. Only ownership can be a risky entity in the first place. More dangerous are general partnerships. This is because there are limits to what LLC can do with regard to acquisitions and mergers. LLCs tend to be suitable for early-stage businesses.