An LLC is a legal entity recognized by the state government to protect your personal assets in a lawsuit and provide a professional structure for your business. There are a number of advantages to setting up a limited liability company ("LLC"). While every situation is different, there are advantages for owners of a closely-held business, including real estate agents and brokerages and for owners of commercial and residential investment property as well.
Some of these benefits include personal asset protection, a single layer of tax, and flexibility in choosing a tax structure since you can choose how you want to be taxed by the taxing authorities. There are limitations on resident aliens with regard to certain tax structure elections. The LLC is inexpensive to operate and requires little knowledge and time to manage since it is the most similar to the way a person operates a business without an entity (i.e., sole proprietorship). In addition, a LLC can be used in your estate planning as a means of transferring and preserving business wealth to the next generation. The estate planning perspectives of having a LLC are not discussed within this Article.
LLCs came on the horizon about seventeen years ago from the West Coast. They were created by lawyers for lawyers. Corporations, on the other hand, have been around for over 200 years. Corporations have a long lineage of court decisions to support what will happen if a corporation or the owners are sued. Albeit the short legal life of the LLC, they have been very protective of their members personal assets since its inception. Given the number of lawsuits that have been filed against the members, partners, or owners and the court cases report that the LLC’s protected them personally and their personal property.
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