Starting an LLC - Advantages to Having PLP for Your Business

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Posted on: 28th Jun 2014

Starting an LLC is one of the most important aspects of a successful company. Unless you live in a state like California, where an LLC (Limited Liability Company) doesn�t provide PLP [personal liability protection] for entrepreneurs, you need to take the necessary steps to set up an LLC for your business. Whether you are the sole owner or manage an office of over 100 employees, your business is always at risk of being sued and liquidated under state law with or without an LLC. However, if your business is not registered under an LLC [and is sued, ordered to pay for damages by a state court judge, and doesn�t carry the full amount required to pay such damages], the law allows the plaintiff to go after your personal property. This could mean losing your house, cars, investments, and other valuables. But, how exactly does an LLC protect your business? This post will examine this in detail.

Easy and Fast to Set Up Online
Starting an LLC is very simple to set up. In fact, you can set one up in less than 10 minutes; even with no prior knowledge or experience. All you would need is a computer with internet access.

Free from Debt Liability
The coolest thing about starting an LLC is that, as the owner, you are normally not liable for the debts that are incurred by the LLC.

Pass-Through Entity
An LLC is a pass-through entity, which means that your income and losses will be passed through to you (or you and the other members) as in a sole proprietorship or partnership. Also, you are allowed to report your share of profit and loss on your individual tax returns. You don�t have to file a separate corporate tax return for your LLC.

No Headaches as a Corporation
As a LLC member, you�re not required to abide by the same formalities of a corporation (S-Corporation or C-Corporation). You are not legally obligated to hold annual meetings or record meeting minutes. However, as a side note, you should follow these procedures for planning and organizational purposes.

Flexible Management Structure
Your LLC has the management and ownership flexibility that is not enjoyed by corporations. You can register the LLC under your name, or set it up under the name of your business. If you have an existing corporation, you can set it up to be the owner of your LLC. Additionally, your LLC is not lawfully limited to have a number of owners.

Personal Asset Protection
As the owner of an LLC, the law provides protection of your personal assets. This means that if your business is sued, your personal assets are not included in the lawsuit. It is only your business profits that are at risk; not your personal property.

Business Credibility
Your LLC appears more professional and trustworthy to clients, customers, vendors, and other businesses. A business that is LLC-registered tells the world that you are a serious and qualified business owner.

Name Security
The name that you choose for your LLC is uniquely yours. No other business, in your state, can claim the same name. However, if your LLC is stripped away, the name will then become available to anyone who wishes to register it for his business.

Permanent Life-Span
Once you have started your LLC, it will remain in existence; even if the ownership or management of your LLC changes. It doesn�t simply die when you (the owner of the LLC) dies.

Tax Flexibility
If you want your LLC to enjoy the same tax benefits of a corporation, without you having to actually convert it to a corporation, you can elect for it to be taxed as a corporation. You can elect for a Subchapter-S Corporation by simply filling out the 8834 tax form.

Deductible Expenses
Your LLC is allowed to deduct normal business expenses for tax filing purposes. These can include equipment and supply purposes, employee training, travel cost, company vehicle repair costs, and many other business expenses.

Conclusion
Now, that you understand the why starting an LLC is important for your business, you will need to learn how to begin the process of setting it up. Fortunately, you have the option of either hiring a corporate attorney to set it up for you, forming one in just a few minutes by yourself. However, the easiest, safest, and most cost-effective way of forming one is to use a reputable and secure online service. The two most notable are legalzoom.com or NOLO. Starting an LLC is not only good for your business, but also serves well to build your business brand and legitimacy.

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Starting an LLC - Advantages to Having PLP for Your Business

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