Are you starting a new business? Having you been operating your business as a sole proprietor, general partnership, or corporation? You need to think about jumping on the Limited Liability Company (LLC) bandwagon, because it might be the best thing you can do for your business going forward and here’s why:
1. Less state compliance and requirements. LLCs have fewer annual requirements and ongoing formalities than S-corporations and C-corporations. Unlike many other states, in Ohio there is no annual reporting requirement or ongoing annual fee. Additionally, an LLC has few restrictions as to ownership. For example the number of members is not capped like in S-corporations.
2. Asset and Liability Protection. LLCs provide superior limited liability protection to their owners/members, something a sole proprietorship cannot accomplish. With the exception of some very particular situations owners/members are not personally responsible for the business debts and liabilities of the LLC. What this means is creditors cannot pursue the personal assets (house, bank accounts, automobiles, etc.) of the owners/members in order to recover for business debts. Ohio specific charging statutes make an Ohio LLC a more superior choice than creating an LLC in many other states.
3. Pass-through taxation and flexibility. LLCs in Ohio do not pay income taxes at the business level. All business income or loss passes through to the owners/members and is reported on their personal income tax return. Because there is no Internal Revenue Code related to LLC taxation, LLCs have various options on how they choose to be taxed.
4. Standing and Credibility. Forming an LLC may help a new business establish credibility with potential customers and clients because they see you have made a formal commitment to your business. Other business owners understand why creating an LLC is beneficial for a business and will perceive your company in a more professional manner.
These are only a few of the benefits of structuring your business as an LLC. Contact our office for a free consultation on how we can help you choose the precise structure for your business.