When most business owners are starting a business, they are not aware of the advantages of the various forms of businesses, but it would help if they considered opening limited liability companies or LLC. Besides, the service providers offer other benefits that the business can enjoy.
Here are the advantages LLC offers to businesses:
Members Enjoy Tax Advantages
Unless an LLC applies for consideration as a corporation, they cannot be double taxed. The LLC law also protects the proprietor from paying some taxes which are required from corporations to pay from their salaries. Moreover, LLC’s do not have a federal law set to govern and thus they use the sole proprietorship laws. This allows them to be cushioned from the double taxing of partners as corporate and as individual imposed on corporations.
Have Flexible Membership
One significant advantage of LLCs is that they enjoy flexibility in membership. They can have more than 100 members, can have corporations and foreigners as shareholders and so on. Besides, all the shareholders of LLCs can enjoy pass-through taxation whether they are corporations or foreigners.
Less Paperwork and Formalities
Corporations require lots of paperwork and documentation of all formal meetings the minutes of all the meetings must n must all be recorded and documented for future reference. They also require numerous meetings, LLC however, does not need too much paperwork as members do not require many meetings. When LLC holds meetings its between partners, unlike corporations where its shareholders and the board of Directors.
An LLC is not required to file an annual report with the state, unlike big corporations. While corporations are required to hold annual shareholders meetings where they are required by law to inform their partners of the performance of the company in the financial year an LLC is not required to do the same and can hold a meeting any time of the year.
Enjoy Flexibility in Management
With corporations, the management structures are so fixed. There must be a board of directors charged with the execution of the policies. Also, there are executive members who are involved in the day-to-day running of the business. Owners or shareholders have to meet annually to elect directors and for other businesses. However, with LLCs, the structures are not fixed and owners can run it and make decisions as they wish.