How Limited Liability Company Brings Benefits to its Founders

Monday, July 13, 2015, 6:00 AM | Leave Comment

When a business starts growing uncontrollably and brimming over the size you have estimated at its beginning, it is the right time to consider reshaping your small business and forming a larger business entity.

In the US you can either go for a C corporation or an S corporation type of a business entity. But also, there is a blending of features that those two types have – a limited liability company.

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  • Why to Found LLC?

    Founding a limited liability company should pay off to those businesspeople who want to use the accounting flexibility that such an entity offers.

    There are two main types of accounting – accrual and cash.

    The accrual accounting method is widely used in C corporations and to a certain extent in S corporations, as well.

    In case of an LLC, you can choose when you want your expenses to be deducted, but most LLCs go for cash accounting, since it is a simpler and more easily operated process.

    Also, LLCs have a less complex structure and they also give more maneuvering space to its founders than a corporation.

  • Tax-Related Benefits

    If you want to run your own business, you have to pay taxes to the state, as well. The biggest advantage that an LLC brings to their members is that the tax authorities do not treat it as a special business entity, which is the company itself does not get taxed.

    However, the members of the LLC are obliged to pay the federal taxes, which are than paid with each member’s separate tax on their incomes.

    It is important to know that in the US some federal states impose tax charges on LLCs, as well, so it is always wise to have a look at the states’ taxation regulations.

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  • Domestic and Foreign Capital

    When it comes to LLCs, they can have foreign owners, and S corporations, for instance, are not allowed to be owned by strangers.

    So, if you are looking a bit ahead into the future, you could be aiming at expanding your LLC to becoming a multinational player. You could merge it with another national or foreign LLC and ensure a stronger position on the market.

    For instance, you could try establishing cooperation with business entities from Southeast Asia, which is one of the most propulsive business areas in the world. In that case, making the best use of Singapore company incorporation will alleviate the whole process.

  • Employers and Licenses

    No LLC can function without employees. After all, that is one of the main reasons for establishing and LLC – joining forces with others to reach business success.

    So, before you start hiring new employees, you have to have the Employer Identification Number (EIN). It can be perceived as a corporative counterpart of the Social Security number.

    Also, starting a business of your own means that you should have a business license. Those licenses are not expensive, but the fines for not having them can be pretty inconvenient, especially at the beginning of your new business life. So, check with the local authorities what you licenses you need.

Going your own way in business terms is the best decision you can make and founding an LLC is probably the easiest way to start your business story. Just make sure that you pay your taxes regularly and have a long-lasting and lucrative enterprise.

Author Bio

Dan Radak is a web hosting security professional with ten years of experience. He is a coauthor on several websites and regular contributor to BizzMark Blog. Currently, he is working with a number of companies in the field of online security, closely collaborating with a couple of e-commerce companies.

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