
Limited Liability Companies (LLCs)
LLCs limit your personal liability and protect your business assets.
A limited liability company is a way for small businesses to limit the liability of its owners. The major feature of a limited
liability company is that it limits the liability of the owners to the extent of their equity while excluding the personal liability
from the general debts and other obligations of the company. This is unlike other forms of business ownership like a sole proprietorship
in which the owners assume all liability for all of the financial obligations of the company.
All states in the United States of America permit the registration of a business as a limited liability company and there are a number
of tax advantages that a limited liability company can look into as part of its business organization. A good tax lawyer can help any
limited liability company find these savings and ensure that their business structure allows them to take full advantage of these tax breaks.
Other advantages of a limited liability company are that it offers much less paperwork and administration than incorporation and
there are fewer requirements to keep records or hold formal business meetings or report to shareholders. Some disadvantages include
the fact that a number of states are putting additional taxes or levies on limited liability companies and that in some cases it may be
harder to raise money from outside investors than in an incorporated business.
The choice of how to register a business, particularly a small business, is dependent on the needs of that particular business. Some small
businesses have a lot of income that needs special tax treatment, while others have limited resources and are forced to start their company
as a sole proprietorship. If you have the ability always look to form your company as a Corporation of limited liability company for the benefits
they provide.
To know which type of business registration is best for a small business it is always a good idea to check with a tax lawyer or a
qualified accountant. They can review the needs of the small business and make a recommendation about the best choice for that particular
business, one that minimizes costs while making the most of possible tax advantages. Also see Corps/S-Corps.
Layered Limited Liability Companies (LLLCs)
LLLCs can reduce your FICA obligation by upto 90%! The goal is to change active income into passive
income. You set up two LLCs one owning the other by 90% then the active company pay 90% of its
active income to the passive company, then the passive company has only 10% of a FICA obligation.
Choosing the Best Ownership Structure for Your Business
When you start a business, you must decide whether it will be a sole proprietorship,
partnership, corporation, or limited liability company. Which of these structures
is right for your business depends on the type of business you run, how many owners
it has, and its financial situation. No one choice suits every business: Business
owners have to pick the structure that best meets their needs.
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