If you are looking to open a business then it’s important that you understand your options. You can begin a partnership, C corporation, or an S corporation, but these are not your only choices. Let’s take a look at a limited liability company or LLC. I am sure you have heard of a corporation, but limited liability is much less familiar to many people. A limited liability is almost exactly like a corporation, but it offers you a much more flexible form of ownership. This type of ownership is going to be member managed or manager managed. I don’t expect you to know what either of those means exactly so don’t worry.
There are many advantages and disadvantages to creating a limited liability company. First lets’ discuss the disadvantages. It’s much harder to raise capital for a limited liability company. Investors simply are not comfortable investing their money into your limited liability company. Another disadvantage is that many states do not see a limited liability company as a form of a corporation and view them as if they are a sole proprietorship, and this is far from what an LLC is.
Alright now for the good things about starting an LLC, it has many advantages. There are absolutely no requirements for shareholders, no loss of power to a board of directors, and there is less administrative paperwork and recordkeeping. A corporation will require you to have very precise paperwork and bookkeeping this is because everybody that is involved in your corporation has to be informed of how things are going. So there is no way around it. A limited liability corporation offers you many different tax benefits. You can actually select how you want to be taxed, as a corporation, S corporation, sole proprietor, partnership. This type of flexibility is a great thing.
It’s very important that before you make your final decision that you speak to your lawyer about every different option. When you understand the advantages and disadvantages to all your options it will help you to make your decision much easier, and there won’t be any major surprises. This is very important. You can even do some research online about the different types of business you can begin, a corporation, limited liability company, partnership or one of the many others. Absorb as much of this information as you possibly can, because it is important to know.