Why Should You form an LLC? Figco, Pasadena’s Premier Financial Adviser, Tells You Why

No other financial and tax consultants in Pasadena have such a broad range of professional and personalized services. They are there to help you with all your business and personal financial solutions, such as setting up a Limited Liability Company (LLC).

There are numerous ways that can be used to form a company, which includes a sole proprietor, a partnership, or a corporation.  All of these have benefits and drawbacks.  One specific benefit of a partnership or sole proprietorship is the flexibility that is allowed in tax reporting used for business income and business expenses.  Profits and losses in a business are passed on to the owners or partners, who are taxed using their individual tax rates applied to their income.

The greatest disadvantage of both a general partnership and a sole proprietorship is that the partners or owners are liable personally for all the business’s debts and claims. On the other hand, incorporation offers limited liability protection to the owners, but the tax flexibility is not available in the same way that it is for a partnership or a sole proprietorship.

If you think that setting up an LLC entity suits your business plan, then consult Figueroa & Co.’s financial and tax consultants. They know all there is to know about LLCs and with their wealth of knowledge and with their great reputation for sound financial and tax advice, you will not be disappointed with what they can provide for you.

The LLC Entity has Key Advantages

  • Business owners have the benefit of limited liability from any business debts.
  • 35 shareholders or more are permitted.
  • The LLC does not have the characteristics of a separate taxable entity, so there is no chance of double taxation.
  • Owners do not have to be U.S. citizens.

The LLC concept is quite a new kind of business structure, which is now accessible in the majority of states and has to be formed within the state where business is conducted. It has been designed to offer the limited liability characteristics given to a corporation and the taxation effectiveness and flexibility of operation that a partnership possesses.  The procedures that need to be followed when forming an LLC partnership are far more complicated and formal than those used in creating general partnerships.

The owners of an LLC are referred to as members, and the length of time for the LLC is normally decided once the organization’s papers have been filed.  The life span of an LLC can be long-lasting or short if decided by the membership.  Any time constraint can be extended, if required, by the members vote at the expiration date.

What is Best: a Corporation or a LLC?

A LLC formation is viewed as an easy kind of business to operate compared to a corporation, because there are less demands on the use of paperwork and documentation.

Many business people who do not wish to maintain minutes of meetings or hold yearly board meetings select to go for a LLC. On the other hand, those who wish to access financing from outside commonly initiate a corporation.

Corporations are business setups for businesses who are attempting to find funding to finance the business. There is some possibility that a LLC formation can access external financing, but it is not as widespread as is found in a corporation.  There are federal laws that have been formulated for anyone who is seeking finance for any corporation.

A LLC has Limited Liability

The limited liability safeguard given to LLCs is almost the same as a corporation. However, the main benefits are that it is able to detach the persons who own the LLC from any legal obligations and debts of the LLC. Occasionally, however, when owners found to be grossly negligent, they have been made liable for their actions.

What is a LLC or Limited Liability Company?

A LLC is a business company which offers limited liability to owners. It bears similarities to a corporation, but this type of ownership has greater flexibility and is particularly suitable for smaller sized companies. LLCs were founded originally in Wyoming, but their creation has spread across all U.S. states.

A LLC with many members is treated the same as partnership when it comes to taxation, it is therefore not crippled with double taxation. LLCs are prearranged with a document which is referred to as “articles of organization”. In addition, it is usual to be in possession of an “operating agreement” which is organized privately through the membership.

Functioning as a LLC does not imply that specific tax forms for federal partnership are not a requirement. The entity’s income and any deductions which apply to every member are inputted on that particular owner’s annual tax return.

What are the advantages of setting up a LLC?

  • One person can set it up.
  • A yearly meeting of shareholders is not necessary.
  • Record keeping and paperwork is minimized.
  • Follows the pass-through method of taxation thus avoiding double taxation.
  • Its limited liability, means that those who own the LLC, who are referred to as members, are not liable for any debts or actions taken by the LLC.
  • By making use of a default tax method of classification, all profits are then taxed at the member level, not the LLC as a whole.

LLC formations are as complicated as any other business arrangement so if you are not sure what type of business option would suit your business and you would like to know more about LLCs as well then the best advice can be found by contacting the Pasadena office of Figueroa & Co. Their financial and tax consultants work considerately and tirelessly to find an appropriate business option for their clients.