Why More Business Owners Choose LLCs

An LLC combines the tax advantages and flexibility of a partnership with the liability protection of a corporation. Forming an Nevada LLC has become very popular in order to protect personal assets. A Nevada LLC also helps avoid "double taxation" because the income is not taxed at the company level instead it is taxed on profits and deductions of losses. There is also no state income tax in the state of Nevada.

Advantages of an LLC

Limited Liability. The owners of an LLC have limited liability for business debts. With a properly structured and managed LLC each owner's personal assets will be protected from lawsuits and judgments against the business. Each owner's liability is limited to the amount each has invested in the company.

Pass-Through Taxation. If an LLC has only one owner, the Internal Revenue Service will automatically treat the LLC as a sole proprietor. Similarly, an LLC with multiple owners will, by default, be taxed as a partnership. Owners report their share of the profits and losses of the LLC on their personal tax returns, and no separate tax is assessed on the company itself.

Management Flexibility. LLCs have much more management flexibility than corporations. An LLC may be managed either directly by its owners or by a manager who may be one of the members or may be hired to run the business. An S corporation is limited to 100 owners while an LLC may have an unlimited number of owners.

Recordkeeping. LLCs are not required to hold an annual meeting and draft meeting minutes. An LLC does need an operating agreement that will specify how and by whom the company will be managed, each owner's name, the amount of ownership interest held by each owner, just to mention a few. Jump 2 Money includes an operating agreement so you are ready to go.

Deductible Expenses. Normal business expenses like an owner's salary may be deducted from the profits of an LLC before the LLC's income is allocated to its owners for tax purposes.

Flexible Profit & Loss Allocations. An LLC is not required to allocate profits and losses in proportion to ownership interest ("member interest'). This means that the owners of an LLC can agree to allocate the company's profits and losses among themselves however they see fit and not necessarily based on the percentage of the company each owner controls.

Nationally Recognized. An LLC is now a recognized business structure in all 50 states and recognized provinces.

Citizenship. All owners of a Subchapter S Corporation ('S Corp') are required to be citizens or permanent residents of the United States. There is no such requirement for an LLC.

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