Limited Liability Company: the Best Choice for Home Business and Small Business Owners

<h1>Limited Liability Company: the Best Choice for Home Business and Small Business Owners</h1>Author: <a title="Austin Clark" href="http://www.articlesbase.com/authors/austin-clark/63614.htm">Austin Clark</a> After deciding what type of products or services you are going to offer, the most important decision you will make in starting a new business is the type of business structure to form.  You will be faced with deciding whether to form a General Partnership, S-Corporation, C-Corporation, Venture Capital or Limited Liability Company.  If you are starting a small or home business a Limited Liability Company or LLC is your best choice hands down. 
 
A Limited Liability Company (LLC) provides you the best of all Worlds, in that it is a type of business ownership combining several features of corporation and partnership structures.  Unlike a general partnership, owners of an Limited Liability (LLC) have limited liability.  This means an owner of an LLC can not lose more than the amount he or she has invested in the company.  Thus, the owner is not personally responsible for the debts and obligations of the company in the event they are not fulfilled. And, unlike a limited partnership, owners of a Limited Liability Company (LLC) do not lose their limited liability by actively participating in management of the business.
 
A Limited Liability Company (LLC) also has many advantages over the most popular business structure, the Corporation.  The Limited Liability Company (LLC) and the S- Corporation both have the benefit of pass-through taxation. This means that owners in the company report their share of profits and losses on each owner's individual tax return. The IRS assesses no separate tax on the company itself. However, in the C Corporation "double taxation" occurs when the C-corporation first pays taxes on its own earnings and then the shareholders or owners pay income taxes on the dividends they receive.
Even though the tax status of a Limited Liability Company and a S-Corp are almost identical, the Limited Liability( LLC) can offer small and home business owners many advantages over a S-Corporation. A Limited Liability Company (LLC) is much easier to form. Requirements for forming a corporation and filing the necessary documents with the IRS to have it taxed as an S-corporation is a complex and time-consuming process. With a LLC you simply file a Certificate of Formation or Articles of Organization with the proper state agency; in most states it is the Secretary of States. Unless you choose to do otherwise, single-member Limited Liability Companies are automatically taxed as sole proprietors by the IRS. Limited Liability Companies with multiple owners are automatically taxed as partnerships. This is much different from the Corporation which  must file IRS Form 2553, "Election by a Small Business Corporation," within 75 days of the corporation's formation to obtain pass-through status as an S corporation. 
There are attractive benefits of Limited Liabilities Companies (LLC).  In contrast to Corporations, LLCs are not required to hold annual meetings or keep formal meeting minutes.  Owners of Limited Liability Companies do not have to issue stocks to the owners. There is no limit to the number of members who may have an ownership interest in the company.  
 
There are some draw backs to an LLC but as it relates to small or home business owners they are so insignificant they are not worth mentioning. It is clear that an Limited Liability Company is a small business owner’s dream. It provides the protection of corporation, while maintaining the simplicity of a partnership.  With an LLC you will have more time to focus on the important details of your business and not spending precious time  pushing useless paper.
 
ABOUT THE AUTHOR
Austin Clark, J.D. has extensive experience in business management and law. After completing law school he has advised many businesses in all aspects of business.  <a target="_blank" href="http://www.wizatbiz.com">http://www.wizatbiz.com</a>
 About the Author: Austin Clark has written many pages on business law. After completing law school Austing has worked in business arena. For more information on business issues visit <a href="http://www.wizatbiz.com" target="_blank">www.wizatbiz.com</a>Article Source: <a href="http://www.articlesbase.com/">ArticlesBase.com</a> - <a href="http://www.articlesbase.com/small-business-articles/limited-liability-company-the-best-choice-for-home-business-and-small-business-owners-446041.html" title="Limited Liability Company: the Best Choice for Home Business and Small Business Owners">Limited Liability Company: the Best Choice for Home Business and Small Business Owners</a>

After deciding what type of products or services you are going to offer, the most important decision you will make in starting a new business is the type of business structure to form. You will be faced with deciding whether to form a General Partnership, S-Corporation, C-Corporation, Venture Capital or Limited Liability Company. If you are starting a small or home business a Limited Liability Company or LLC is your best choice hands down.

A Limited Liability Company (LLC) provides you the best of all Worlds, in that it is a type of business ownership combining several features of corporation and partnership structures. Unlike a general partnership, owners of an Limited Liability (LLC) have limited liability. This means an owner of an LLC can not lose more than the amount he or she has invested in the company. Thus, the owner is not personally responsible for the debts and obligations of the company in the event they are not fulfilled. And, unlike a limited partnership, owners of a Limited Liability Company (LLC) do not lose their limited liability by actively participating in management of the business.

A Limited Liability Company (LLC) also has many advantages over the most popular business structure, the Corporation. The Limited Liability Company (LLC) and the S- Corporation both have the benefit of pass-through taxation. This means that owners in the company report their share of profits and losses on each owner's individual tax return. The IRS assesses no separate tax on the company itself. However, in the C Corporation "double taxation" occurs when the C-corporation first pays taxes on its own earnings and then the shareholders or owners pay income taxes on the dividends they receive.

Even though the tax status of a Limited Liability Company and a S-Corp are almost identical, the Limited Liability( LLC) can offer small and home business owners many advantages over a S-Corporation. A Limited Liability Company (LLC) is much easier to form. Requirements for forming a corporation and filing the necessary documents with the IRS to have it taxed as an S-corporation is a complex and time-consuming process. With a LLC you simply file a Certificate of Formation or Articles of Organization with the proper state agency; in most states it is the Secretary of States. Unless you choose to do otherwise, single-member Limited Liability Companies are automatically taxed as sole proprietors by the IRS. Limited Liability Companies with multiple owners are automatically taxed as partnerships. This is much different from the Corporation which must file IRS Form 2553, "Election by a Small Business Corporation," within 75 days of the corporation's formation to obtain pass-through status as an S corporation.

There are attractive benefits of Limited Liabilities Companies (LLC). In contrast to Corporations, LLCs are not required to hold annual meetings or keep formal meeting minutes. Owners of Limited Liability Companies do not have to issue stocks to the owners. There is no limit to the number of members who may have an ownership interest in the company.

There are some draw backs to an LLC but as it relates to small or home business owners they are so insignificant they are not worth mentioning. It is clear that an Limited Liability Company is a small business owner’s dream. It provides the protection of corporation, while maintaining the simplicity of a partnership. With an LLC you will have more time to focus on the important details of your business and not spending precious time pushing useless paper.

ABOUT THE AUTHOR

Austin Clark, J.D. has extensive experience in business management and law. After completing law school he has advised many businesses in all aspects of business. http://www.wizatbiz.com

Austin Clark has written many pages on business law. After completing law school Austing has worked in business arena. For more information on business issues visit www.wizatbiz.com

Rate this Article:

4 / 5 stars - 1 vote(s)

Re-Publish

Article Source: http://www.articlesbase.com/small-business-articles/limited-liability-company-the-best-choice-for-home-business-and-small-business-owners-446041.html

Article Tags: Home Business, Small Business, Llc, Corporation, Limited Liability Company, Business Startup, Startup, Llcs, Business Formation, Business Structure

Related Videos
Related Articles
Ask / Related Q&A

Play

How to Evaluate Insurance Plans from Different Companies for Self-Employed

Play

Telling the Insurance Company Things that may Affect Health Coverage

Play

Forming a Corp VS. LLC

Play

LLCs and VCs

Play

Forming an LLC

Latest Small Business Articles
More from Austin Clark

VeloBind Strips For Beginners - Choosing the Right Strip For Your GBC Velobind Binding Machine

By: Jeff McRitchie | 01/12/2009
If you're interested in GBC's VeloBind binding system, perhaps you need some guidance about what types of strips you should buy. Determining which ones are the right ones to get can be a bit confusing, especially if you're new to binding. How do you know if you need the hot knife strips?

Taking a Look at the Unibind XU138

By: Jeff McRitchie | 01/12/2009
In a world in which plastic comb binding rules, it's nice to have more elegant options available. One of these is the Unibind binding system. Unibind offers an entry-level machine - the Unibind XU138 - which is a good choice if you'd like to explore this type of binding without breaking the bank. Unibind makes your documents look like a real book with minimal effort. To find out more about this great binding method, please continue reading.

It's Easy to Bind With Unibind Supplies

By: Jeff McRitchie | 01/12/2009
Unibind binding machines are some of the easiest binding machines to use. Plus, they offer one of the most sophisticated binding styles available, thanks to Unibind binding spines. But did you know there are actually several different types of binding supplies you can use with your Unibind system? This article will take a look at what supplies you can use with your Unibind machine. Let's take a look.

Taking a Look at the Unibind ST1025 Binding Machine

By: Jeff McRitchie | 01/12/2009
Unibind binding machines are well-known for being easy to use in addition to providing some of the best-looking binding you could ever see. The Unibind lineup has several different machines that can bind anywhere from one to 48 documents at once, so they are great for both large and small jobs. However, if you need a higher capacity binding machine, the Unibind ST1025 is a machine that warrants a look. This review will fill you in on all you need to know about the Unibind ST1025.

Sizing Things Up With the Unibind Spine Measurer

By: Jeff McRitchie | 01/12/2009
One of the most important steps in the binding process is choosing the right size cover or spine for your documents. This can be tricky and often involves a lot of guesswork, as well as possibly getting out a ruler and trying to figure out just how thick your document is.

Unibind Binding Machines and Supplies - An Introduction

By: Jeff McRitchie | 01/12/2009
When it comes to binding your documents, you have a lot of options available. From plastic comb to thermal binding, the options are almost limitless. However, if your office or organization needs an easy binding method that's also professional-looking, you should check out the lineup of Unibind machines.

Effective Gas Saving Tips from Those Who Use It the Most

By: Henry Funk | 01/12/2009
A group of delivery professionals give their most effective suggestions on how to save gas. Because fuel costs greatly impact their income, delivery drivers become experts on the best ways to keep fuel costs down.

SEO Software Secret to Using Images to Achieve Better Organic Rankings

By: Salvador Malone | 01/12/2009
When discussion takes place about how to achieve better organic website rankings on the major search engines, rarely will you hear anyone suggesting that your websites images are an opportunity to help you achieve this goal. The reason for this is because search engines like Google, Yahoo & MSN experience the same problem as visually impaired users of your website and that is that they cannot recognise or "see" your images. However there is a way (

Minimum Wage & Overtime: Who's Covered

By: Austin Clark | 24/09/2008 | Career Management
The Fair Labor Standards Act (FLSA) establishes standards for minimum wages, overtime pay, record keeping, and child labor. These standards affect over 100 million workers, both full-time and part-time, in the private and public sectors.