When entrepreneurs consider business formation, LLC is usually one the of the most common structures chosen. Adding the suffix to a business name comes with a level of prestige that can win investors’ and clients’ trust. But this entity has a lot more to offer entrepreneurs.
BusinessInsider.com reports that filing an LLC for a business can be highly advantageous. The LLC protects entrepreneurs’ personal assets. With an LLC, personal identity and corporate identity are separate. This means creditors can’t repossess a business owner’s car, savings or home.
LLCs also offer a number of tax benefits. An LLC permits an unlimited number of shareholders to have profits or losses taxed directly on a corporate level, as if the company were a partnership. This avoids double taxation to which many business types are subject.
The entity also offers uninterrupted business. The source explains that an LLC is a legally binding structure that has infinite life – a business can continue even with the death or retirement of shareholders.
Additionally, LLCs might benefit the overall economy. This structure promotes hiring as owners will benefit from having a lot of employees. "A person [with a small business but] without employees does not receive the full benefit of the LLC," Morris Armstrong, a financial planner who owns his own business, told the source.
With these points in mind, entrepreneurs might be inspired to form an LLC before they go any farther with business plans. According to one small resource forum, the entity is also good for developing businesses as it is the only one of the commonly formed structures that allows flexibility in who manages the business.