Friday, August 30, 2013

Limited Liability Company Unlimited

Are you planning for a business venture? You may want to set it up as a limited liability company instead of sole proprietorship. There are several advantages if you put up your business this way and it has protection not covering solo ownership.

Primarily, a limited liability company or LLC is a business entity with the combination limited liability protection of a corporation and the pass-through taxation scheme of solo ownership. It means, it has a protection covering you as an individual against liabilities and are also taxed based on the money you earn from the company.

When it comes to protection, LCC is covered. Basically, it is a protection from all claims against the company and your own debts.  In LCC, the owner is free from liability as a creditor unlike in a sole proprietorship where the proprietor including all his assets are liable for any incurred debts.

 With tax protection, there's no double taxation.  Compared to corporation wherein income is taxed same as any distribution to the owners as their individual income. In LCC, the income generated by the company goes directly to the partner-owners. Mainly, the income is only taxed as earnings by the respective owners, so there is no double taxation.

You can form an LLC with just sole ownership on depending on the State you live in or with as many as 10.   There are different levels of partners within the LCC and as a major owner, you decide the percentage of distribution each will get.

This is a kind of partnership in which the partnership is only liable as an entity for debts and obligations and the partners are not obliged personally.

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