Many people are mistaken in believing that LLC stands for “limited liability corporation.” In fact, it actually stands for “limited liability company,” and the differences are considerable. LLCs are the most popular business form for smaller companies today, for they afford considerable flexibility and protections. If you are considering forming your business as a limited liability company, you may want to work with a College Station business attorney.
Where Did LLCs Come from?
Limited liability companies are fairly recent. Indeed, they have only existed since the 1970s, when Wyoming first established a new form of business that favored smaller enterprises. Prior to this, business owners had only a few options, none of which was optimal. The corporate structure was very costly with its double taxation, and partnerships and sole proprietorships offered no protection of owners’ personal assets.
Both of these issues were answered when states began allowing for the formation of LLCs. The assets of owners are protected from lawsuits against the company, as is the case with corporations, yet they do not have the tax problems. In corporations, the company is taxed on profits, and shareholders are taxed again on dividends they receive. The net profits they enjoy, therefore, are taxed twice. With the LLC, the taxes flow through the corporation to the individual owners in accordance with their shares in the company.
Other Benefits of LLCs
The limited liability company option allows for considerable flexibility. The companies are not restricted to 100 shareholders, as are S corporations. Moreover, LLCs are comparatively easy to create. Finally, having the initials “LLC” after a company name has come to be synonymous with the sort of professional image previously enjoyed solely by corporations. Indeed, many people don’t know that LLCs and corporations are distinct from each other.
If You Are Considering an LLC
If you are thinking about setting up your business as a limited liability company you have many options. It is important that you work with a College Station business lawyer who can provide you with advice on how best to organize your enterprise, and ensure that you meet all the requirements. Call Peterson Law Group today at 979-703-7014.