An LLC is a limited liability company. This means that the owners and their personal assets are protected from any debts owed by the business. Our team of lawyers here in Tampa believes you should look at the pros and cons to creating an LLC. There are many reasons why an LLC can be to your advantage when setting up a business. The obvious are tax advantages and liability protection. But there are also disadvantages to an LLC too. Some are liability cases and a multi-state LLC. It’s a good idea to consult with your lawyer in Tampa before deciding which route to go when setting up a business.
An LLC is taxed as what is known as a “pass through” entity. This is because profits earned by the LLC “pass through” to the owners and is taxed at their individual rate. The idea behind this is to prevent double taxation since the business pays tax and the owner also pays tax on their earnings. Meet with a estate planning lawyer in Tampa in the Tampa bay area to see how this could benefit your business.
Wondering what this means for you? Well this allows for certain tax benefits. You can deduct losses and health insurance costs on your personal income tax returns. This is because active owners’ income is under self-employment tax. If there are owners who are not active, then they fall into a different category and are limited to what they can deduct from personal taxes.
The structure of an LLC depends on how many owners (members) are in it. There is no limit; it can even be just one person. If that is the case, then it is taxed as a sole proprietorship. Another thing is that LLCs don’t have to have a board of directors or shareholder meetings. They aren’t a corporation so they don’t need to be as paperwork heavy. Members of an LLC can structure ownership, management, business relationships, profits, and voting rights as they deem fit.
As mentioned earlier, one of the key advantages of an LLC is that personal assets are usually protected from the debt of the LLC. This protection though could be weakened if members of an LLC are involved with fraudulent acts. It’s up to the courts in how these proceedings go since there is a lack of precedent.
Ease of Transfer
In many states, an operating agreement can determine how ownership interests are sold or transferred to another party. This allows a member of an LLC to easily transfer their shares or sell them. Another benefit to setting up an LLC is to retain family assets, such as real estate. Some families do this in order to have assets pass directly to living family members.
Check out our blog for more tips and info. Contact Fresh Legal Perspective today by calling (813) 448-1042 and ask about meeting one of our lawyers!