Florida entrepreneurs have many important considerations when starting their business. One of the most important decisions comes early on, when entrepreneurs must decide which entity or structure best fits their business.
A common option many turn to is a limited liability company (LLC), which is a business structure that offers similar benefits to both a corporation and a partnership. Understanding these benefits may help entrepreneurs to decide if an LLC structure is right for them. Below are two of the biggest advantages LLCs provide:
1. Division of personal and business matters
One of the main draws of an LLC is the division of personal and business matters. An LLC can help shield personal assets of the business owners from the debts and liabilities of the business. This separation means that if the business is sued or has creditors attempting to collect debts, the owner’s personal assets, like their home, car, savings and other personal property, are safe. As long as these assets aren’t comingled, that protection applies.
2. Pass-through taxation
When business owners establish an LLC, they can have the benefit of pass-through taxation. This means that profits from the company are handled on the owner’s personal tax returns instead of the company paying taxes on profits and then the owner paying taxes on their income. This does away with the double taxation that would occur in certain other business structures.
LLCs provide other benefits as well, including greater flexibility for LLC members and fewer barriers involved in starting up the company.
Entrepreneurs in the early stages of starting a business should carefully consider the business structure right for them and their business. A business law attorney can advise on the options available to you, as well as advantages and disadvantages to consider.