If you want to start a business, you might think about starting a limited liability company (LLC). You should know that LLCs offer business owners a number of benefits, which is why many of the most successful companies in the United States have chosen this business form.
What exactly is an LLC?
LLCs are becoming more popular for new businesses because they protect the owners from responsibility and give them more freedom than corporations, especially when it comes to taxes. The LLC doesn’t pay taxes on its own. As a “pass-through” company, the business owner or owners report the income on their individual tax forms. For a small fee, you can set up an LLC by sending forms to your state.
The owner or owners of an LLC have a lot of freedom when it comes to running the business. You can choose how you want to be charged and how you want to run your business. Your LLC can have one or more members, and all of them are safe from personal liability if you can’t pay your business bills or if you get sued.
As the most common type of business organization in the United States, the Well-Known LLC Companies LLC has been chosen by many of the biggest and most successful companies in the country. You may have heard of:
1. Anheuser-Busch
Anheuser-Busch Companies, LLC, a division of Anheuser-Busch InBev, has been making beer since 1852 and earns more than $15 billion a year in sales. Rolling Stone or Budweiser? Who doesn’t know them?
2. Blockbuster
Blockbuster LLC was a well-known chain of shops that rented videos and DVDs. It was founded in 1985 and is now a subsidiary of the Dish Organization.
3. Westinghouse Electric Company
LLC was founded in 1999 as a nuclear power business. There are currently more than 9,000 people working there.
4. Amazon
Amazon.com Services LLC, which was started by Amazon.com in 2002, focuses on the technology and products market. It brings in almost $1 billion every year.
5. Hertz
The Hertz family of businesses includes the car rental business Hertz Hertz Vehicles LLC.
6. Sony
Sony Interactive Entertainment LLC is a division of Sony, Inc. that makes video games and digital entertainment.
7. IBM
IBM Credit LLC is a branch of IBM that helps people pay for purchases of IBM products and other products.
8. Google
Google Google LLC is a branch of Letter set, Inc., and it is the biggest search engine in the world.
Benefits of forming an LLC As previously stated, LLCs offer numerous advantages. These include:
1. Simplicity
Creating an LLC takes a lot less effort than making a company. You only need to file articles of organization and have an operating agreement to set up ownership, jobs, and duties. As with a business, there are no annual meetings or reporting requirements, and you don’t need a board. But in some places, you have to send an annual report for an LLC. Creating an LLC also costs less. Corporations and partnerships are best set up with the help of an agent, which costs money. But it’s a good idea to have a lawyer look over your LLC’s running agreement. Also, businesses have to pay fees to file their yearly reports.
2. Control
You can be the only owner of an LLC, just like you can be the only owner of a single proprietorship. This gives you full power over the company. Even if there are more than one owner, you can organize management however you want with your working agreement. You don’t have to answer to a board of directors or anyone else. If your business is not a sole proprietorship, you have more freedom in how you run it.
3. Limited Liability Company
Unlike a single proprietorship, an LLC is seen as a legal body separate from its owner. Your personal assets are protected, just like they are in a business, because you are not personally responsible for the company’s debts or legal responsibilities. In a single proprietorship or general partnership, if you have responsibilities, your personal assets, like your home, are at risk. But in some situations, LLC owners may put themselves at risk. For example, if you are asked to personally secure a business loan, you are responsible for the debt.
4. Tax Advantages
An LLC is considered a “pass-through” business for tax reasons, which means that the owners get income from the company for tax purposes. The LLC is not a taxable item, so all pay is recorded on the tax form of the owner or owners and taxed at their own duty rate. When shareholders get dividends from a company and the business itself is taxed, this is called “double taxation.” The Tax Cuts and Jobs Act added the 20% pass-through benefit, which lets LLC owners subtract up to 20% of their business’s income. An LLC can choose to be treated as a company or a partnership if it’s better for the business.
5. Profit-Sharing Flexibility
Profit Sharing Flexibility Most businesses split income based on how much money each owner put into the business. Most partnerships share earnings evenly. Dividends are given out by companies based on how much control each member has. In an LLC, the working agreement is where the owners can decide how the benefits will be split. One owner can get a bigger share of the income than their ownership interest, even though the other owners get less. This could happen if one person is more interested in running the business than the others.
6. Credibility
LLCs have an edge over sole proprietorships in that suppliers and customers trust them more. People usually think of a limited liability company (LLC) as a more stable business rather than a one-person show.
In conclusion,
As you can see, many great businesses have chosen the LLC business format because it has many benefits. LLCs are popular because the benefits they offer are also good for small businesses.