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The term LLC stands for Limited Liability Company, a business formation that combines the limited liability of a corporation with the taxation benefits found within a partnership. Instead of the company having a partnership, business owners of an LLC are called members. Within an LLC formation, there can be several members or just one. The laws of a state in the US will govern how an LLC operates, with these laws varying based on the location of the business.
Pros and Cons of an LLC
If you are considering starting a business with an LLC or redefining your business as an LLC, there are pros and cons to this decision. An advantage to filling out an LLC tax form and making this distinction is that the liability is not placed on the LLC members. With a partnership or a sole proprietorship, the individuals are responsible for the debt of the company. With an LLC, the members cannot be held responsible for criminal behavior or fraud within the business.
Additional advantages of an LLC include the ability to choose pass-through taxation or members along with no requirement to host an annual meeting within the business or strict record-keeping.
While there are pros, there are also disadvantages. Such cons of an LLC include a self-employment tax possibility, it can be costlier to develop and if a member dies, the LLC may fall apart, depending on the state involved in the formation of the business.
Even though there are disadvantages, by creating an LLC, you will have plenty of room to grow your business and reach any long-term goals. Along the way, you are able to avoid a full liability burden within members.
By visiting Gov Doc Filing, you have access to a 24/7 support team that can help you with an LLC formation, including offering documentation online for filing for LLC EIN numbers.