Protection for your personal assets? Protection of your company’s income against double taxation? Allocation of shares and profits according to the shareholder’s efficiency and performance? You can found all of these in the limited liability company, or most commonly known as LLC.
LLC owners have personal limited liability on the company’s debts and obligations. In other words, if you are an LLC owner, your company’s creditor can not go after your personal assets such as a piece of real property or a personal bank account as payment for the obligations of your company. You will only lose the money you have invested on the LLC. Nothing more than that.
You and your colleagues decided one day to form an engineering consultation firm. After you have decided on the financial matters, you are now planning to adopt a business structure that will be the identity of your company. A corporation structure may suit your business needs. However, one of your friends suggested that you adopt an LLC business structure instead of a corporate structure.
Every entrepreneur wants to have a personal protection against lawsuits and other legal claims for their company’s debts and liabilities. In other words, if you are an entrepreneur, you do not want to be the one compensating your company’s debts to its debtors up to the extent that your personal properties and assets are already at risk.
If that will be the case, forming a limited liability company or LLC is just right for you. Aside from your personal limited liability of your company’s debts and obligations, you have also the opportunity to maximize your profits because of its pass-through-entity features for tax purposes. It is contrast to the corporation’s double taxation, which taxes are imposed both on income generated from corporate and the individual shareholder’s level. Other benefits are also noted once you have already started operating your LLC.
