Limited Liability Companies (LLCs) aren’t new. They’ve been around since the late 1970s.

It’s only that they’ve been growing in popularity recently, and for a good reason.

From the benefits of LLC formation that we’re about to uncover, you’ll soon realize why an LLC is the most popular business entity among business owners today.

Before we begin, let’s ensure we’re on the right page about what an LLC actually is.
What Is an LLC?

A Limited Liability Company (LLC) is an independent legal entity that’s designed to limit the personal liabilities of business owners in case of company debts or legal issues.

The business structure consists of at least one owner (known as a member), which could be an individual, corporation, another LLC, or a foreign entity.

To form an LLC in your state, you’ll need to follow the requirements of that state’s regulations. Begin your LLC application online with GovDocFiling’s business formation packages.

4 Benefits of Starting an LLC

If you’re thinking of starting an LLC, below are some of the biggest advantages to expect.

1. Provides Limited Liability Protection

One of the benefits you’ll enjoy by starting an LLC is liability protection.

An LLC is regarded as a separate entity, thus it does not get taxed nor takes any losses.

Instead, all the losses and profits from the company are reported on the personal income tax returns of LLC owners.

This means that as a member of an LLC, creditors cannot pursue your personal assets like savings accounts or houses to pay the company’s debt. In case a lawsuit or claim is issued, only the business assets are at risk of a claim.

Keep in mind that just as with other business structures, you could still be liable for business debts in some instances, like when you:

• Personally guarantee a business loan
• Pledge a personal property as a collateral for a business loan
• Commit fraud
• Breach duties to your LLC
  

2. Helps Boost Your Business’s Credibility and Professionalism

Trust is an important factor in any business. Whether you want to form another LLC, get a new client, or obtain a loan, you must earn trust first.

Many investors and consumers are looking to engage with a business that has a legal structure in place.

Being registered as an LLC, thus, enhances a business’s credibility and professionalism. It shows you’re serious about your business and are willing to put in the time, money, and paperwork to make it legit.

Leveraging top LLC services like ZenBusiness for help with LLC-related information can further strengthen your company’s professional image.

Looking to gain deeper insights into ZenBusiness’s benefits and services? The GovDocFiling comprehensive review discusses ZenBusiness in-depth, outlining its services, pros, and cons.

3. An LLC Is Incredibly Easy to Form

Among all kinds of business structures, an LLC is the easiest to form, with less paperwork, fewer complexities, and cost.

With an LLC, you don’t need to convene annual shareholders meetings, file annual reports, or even have a board of directors.

As long as you have a registered agent (whether an individual or a company) that will accept any legal or tax documents for your business, you’re good to go.

This means that you’ll spend substantially less time and money on filing paperwork and maintaining records.

You also don’t need an attorney to create an LLC. You can instead leverage an LLC formation service like GovDocFilling for expert guidance on filling your LLC online quickly and getting authorized to conduct your LLC business in no time.

4. Enjoy Flexible Tax Options

An LLC gets the best of all the worlds when it comes to taxation.

By default, an LLC is subject to “pass-through taxation,” which implies that the company’s profits and losses are passed through to the individual tax returns of every member and taxed at their individual’s tax rate.

The LLC doesn’t have to pay any federal corporate income tax since it’s a pass-through entity. As a result, members aren’t subject to double taxes, as is the case for shareholders of corporations.

LLCs can also choose to be taxed as either one of these four tax designations, each having its perks:

• Sole proprietorship: This caters to single-member LLCs only. Profits from the business are distributed to the member(s). They also pay the full amount of the income tax.
• General partnership: This caters to multi-member LLC. Profits from the business are distributed to every member. Each member also pays income tax just on their portion.
• S corporation: This caters to single or multi-member LLCs. Members can pay themselves a salary and pay payroll taxes on this amount. Profits from the balance are then distributed as income, but these profits aren’t taxed. 
• C corporation: This is for single or multi-member LLCs. All the profits from the business are taxed at a corporate rate. The profits of the members are also taxed individually. This is referred to as double taxation.
  
  

Conclusion

There are endless reasons to start an LLC, the most obvious one being limited liability protection.

Forming an LLC will not just protect your personal assets in the event of a lawsuit or business failure; it will let you sign contracts and operate your business under your preferred name. 

Thinking of setting up an LLC?

Consider GovDocFiling LLC formation packages. We will work closely with your state and the IRS on your behalf to ensure your LLC is registered, up and running in no time.

All you need to do is fill our simplified online application form, which only takes about 10–15 minutes to complete, and we’ll handle the rest for you.

Author Bio:

Brett Shapiro is a co-owner of GovDocFiling. He had an entrepreneurial spirit since he was young. He started GovDocFiling, a simple resource center that takes care of the mundane, yet critical, formation documentation for any new business entity.