One of the most important aspects of starting a business is to choose the entity that offers the maximum benefit to your business. Limited Liability Companies are considered as the most commonly preferred business establishments of various fields. Limited liability is known for its legally recognized perpetual business entity. The incorporation of LLC is easy, simple and fast. LLC combines the flexibility of a partnership with the liability protection enjoyed by corporations. There are lots of advantages of forming an LLC instead of a corporation LegalZoom vs Incfile
One of the biggest benefit of forming an LLC is you have the option to choose how you are taxed. LLC’s tax rate is completely dependent on the owner’s income. Under the Corporate treatment option, if you have higher income you will be getting lower tax rates.
Protection of personal assets
By forming an LLC you can protect your personal assets from those of your company, if any lawsuit is brought against your company. Thus LLC makes your asset protected
No Double Taxation
Corporations are subject to double taxation, where the corporation pays the taxes at the corporate level first and then on the income which are distributed as dividends. LLC are not subject to double taxation like Corporations. Business income is reported on your personal income tax return and axed once. You can approach a Business Tax preparation Company near you to know the procedure for filing return.
Low Audit Risk
Sole proprietorship faces more risk of IRS audit than LLC. If you have taken effort to form LLC, then you are in the business where there is less risk of IRS audit.
If you are running an LLC, then you have wide choice in how to handle the business. You can add members to your business easily without much formalities as in corporations. A Limited Liability Company is a flexible business structure which gives you a variety of options to manage your company.
If you are running an LLC, you can lease your personal assets to the company. This means you can run your LLC from your home office and show like the LLC leasing the office from you. By doing so you can write off business expense and improve your financial situation. For doing this you need a formal lease agreement.