Summary:
Forming an LLC is a popular way for business owners to limit their liability and protect their assets. This article focuses on the advantages of an LLC, and how it can be used most effectively.

Details or Sample:
There are many ways for an individual to secure his or her financial future, but starting a business can be one of the best. Starting a business can be a great way to secure your own financial future, and many of the most successful ventures in the country started out as one or two person operations.

Of course it is important for any would be business owner to plan carefully, and how the business is structured can have a lasting impact on the success of the enterprise. One of the most useful ways to structure a small business is the LLC, or Limited Liability Company, and all business owners should take a look at an LLC to see what it has to offer.

Simply put, a limited liability company is a business entity which is separate and distinct from the person who runs it. The LLC is similar to a corporation in that it is distinct from a person, and in fact an LLC is often described as a combination between a sole proprietorship or partnership and a corporation. The LLC allows the business owner to enjoy the liability protection of a corporation without the complicated tax and business requirements of a corporation.

It is important for any business owner considering an LLC to understand the tax implications of this form of business. The profits of the LLC are passed through to the personal income of the business owner or owners. In the event there is only one owner, the LLC will be taxed in the same way as a sole proprietorship, and the income received by the business will generally be reported on Schedule C.

If the LLC has more than one owner, it will be taxed as partnership. No matter what the structure of the LLC, it is important for the business owner or owners to seek the advice of a qualified tax professional.

The management structure of the LLC is simpler than that of a corporation, providing another benefit for business owners. The LLC will typically be managed by its members, as opposed to the more rigid management structure of the corporation. The owners of the LLC are known as members, and these members will typically have a voting interest which is proportional to their ownership of the business.

Many business owners will want to set their new venture up as an LLC from the start, but there may be times when a business owner will want to change his or her business structure to that of an LLC. In this case it is important for business owners to determine whether the change to a limited liability company will require the issuance of a new taxpayer identification number. It is important for business owners considering such a change to consult with their accountant, attorney or other business professional to determine if such a change will be required. Some of the circumstances that may require the issuance of a new employer identification number (EIN) include:

 If the business has been purchased by an individual who plans to run the enterprise as a sole proprietorship.
 If the business has been inherited from the former owner and will be run as a sole proprietorship.
 If the business is a sole proprietorship that will be changing its business structure to an LLC, partnership or corporation.
 If the current business structure is a partnership and it will be changed to a sole proprietorship, LLC or corporation.
 If the business is currently a corporation and will be changing its business structure to that of a sole proprietorship, corporation or partnership.
 If a business currently structured as an LLC is to be changed to a partnership, corporation or sole proprietorship.
 If the original owner of the business has died and the business will be passed on to his or her estate.
Forming a limited liability company can have a great many benefits for business owners, but it is important for those business owners to carefully consider the decision and seek competent advice in order to structure the business properly. Creating a business from the ground up is a difficult and time consuming endeavor, and it is important for business owners to protect their investment and their personal assets.
A limited liability company is a great way for many business owners to enjoy the liability protection of a corporation while still enjoying the simplicity and tax benefits of a corporation. The fact that the income produced by an LLC is passed through to the owner or owner’s tax return makes it easier to file taxes and provides for simpler record keeping as well. Owners of limited liability companies can also enjoy potential tax savings through retirement accounts, business investment credits and a number of other tax savings strategies.
As with any type of business structure, however, it is important for those considering forming an LLC to seek the advice of a qualified tax professional. Enlisting the advice of a certified public account, enrolled agent or other tax professional will help business owners make the most of their LLC and enjoy the tax savings and liability limitations that make this form of business so attractive.

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