A limited liability company (LLC) has become a popular choice of a business structure for small businesses. There are many benefits of an LLC including:
• Unlike a sole proprietor or partnership, an LLC does not require the owner to be liable for the debts or liabilities that the company is subject to. Creditors cannot make claims on an owner’s personal assets, such as their car or home, to repay money owed by the company: any liability is limited to the assets of the company.
• There is less paperwork associated with managing an LLC than, for example, setting up a corporation (which must hold annual meetings and has onerous record keeping requirements).
• LLC companies can take advantage of ‘pass-through’ taxation status which means they are not subject to corporate taxes; rather, the income and expenses are passed through to the owner’s personal tax return where they only pay personal income tax rates.