Limited Liability Companies

A limited liability company (L.L.C. or LLC) is a business entity offering limited liability (personal asset protection) to its owners. In that respect, it is similar to a corporation, and is often a more flexible form of ownership. A limited liability company can help to protect your personal assets that you have worked hard to own. LLCs are organized with a document called the "articles of organization" and must have an "operating agreement" between the owners or "members."

You should consider an LLC since it allows for pass-through taxation. There is no corporate tax on an LLC.

LLCs are more like a partnership, providing management flexibility and the benefit of pass-through taxation. Pass through taxation means that taxable income of the business will "Pass-Through" to the owners' individual tax return. Federal and State Tax Laws treat a LLC like a partnership. For a single member LLC, it will be treated like a sole proprietorship.

An LLC structure basically allows the owners or members of an LLC to record their taxable income on their individual income tax returns like a partner and sole-proprietor would. However an LLC can be treated for tax purposes like a corporation by electing corporate tax treatment.

Members of the LLC are not typically held personally responsible for the debts and liabilities of the business. Also, LLCs generally have no ownership restrictions and the members have flexibility in structuring the management of the company. An LLC does not require as much annual paperwork which generally makes it more favorable than a corporation. The last item you may want to consider is that customers and the public generally perceive an LLC as a more professional entity than a sole proprietorship or partnership.