Understanding the basics of a limited liability company

On Behalf of | Sep 26, 2019 | Firm News

Starting a business is an exciting time for an Ohio entrepreneur. Maybe you dreamed for years about launching your own company and working for yourself, but there is much more involved with this process than just having a dream and a company Facebook page. There are certain steps you will have to take and decisions you will have to make. One of the choices that you will have to make is deciding what type of company you will want to have. There are various types of business structures, and choosing the right one is important. This choice will impact how your company will operate and the way you will have to pay taxes. You will find it beneficial to do your research and be familiar with the implications of each option. What is an LLC? One of the most popular types of businesses is a limited liability company. An LLC is a smart choice for many business owners, but that does not necessarily mean it is optimal for you. One reason that many people prefer this type of company structure is because it limits the personal liability of the business owner. This means that if you have an LLC and your company owes significant debt, you will not lose your personal assets if the debts go to collection. It is not always easy to make choices that will impact your company for years to come. It is smart to think carefully about not only the benefits of an LLC, but also at the potential drawbacks. Some things to consider include:
  • Setting up an LLC requires filing certain paperwork with the state, but it is less complicated than setting up a corporation or other type of company.
  • With an LLC, the owner will list profits and losses on his or her own personal tax returns.
  • One potential drawback of an LLC is that the death of a member or the sole owner/operator may result in the dissolution of the company.

An assessment of your case can help you see if an LLC the right choice for you. If you are unsure, you may want to speak with an experienced business attorney who can discuss the benefits and drawbacks of this choice before you move forward. With much at stake, you would be prudent to be cautious and careful during the formation stage of your company.