The legal structure of a company impacts numerous foundational aspects of its operations. From how a business is taxed to whether owners risk personal liability for their company’s debts and/or legal judgments, the legal structure of a company matters.
If you aspire to start your own business in the near future, it is undeniably important to carefully consider the business structure options available to you before settling on one over the others. For various reasons, it is likely that forming a limited liability company (LLC) is going to be in your best interests.
Why are LLCs preferable most of the time?
LLCs essentially function as a hybrid of the three other primary business structures available to new company owners. On the one hand – like partnerships and sole proprietorships – LLCs offer members the ability to manage their operations flexibly. On the other hand – like corporations – LLCs offer members personal liability protection in the event that their companies incur debts or are sued.
As an added bonus, LLC members can choose to have their operations taxed as distinct entities (like corporations) or on their personal tax returns (like sole proprietorships and partnerships). Additionally, LLCs can be formed by one or multiple members, which means that any aspiring business owner can take advantage of this particular structure.
LLCs are not the right structure for every business, as there are benefits to choosing a sole proprietorship, partnership or corporate structure for certain business types to be sure. With that said, LLCs are generally preferable for most ventures, so it may benefit you to seek legal guidance to confirm whether this approach would best serve your new company’s interests or not.