What are the benefits of an LLC?
An LLC offers primarily two benefits. First and foremost, an LLC provides the members protection from personal liability. Additionally, an LLC provides certain tax benefits. That is, an LLC allows for pass through taxation. An LLC is similar to a corporation because it has a) limited liability; b) free transferability c) continuity; d) centralized management. The taxation of a limited liability company is comparable to an S corporation. However, unlike an S corporation an LLC can have an unlimited number of shareholders or “members” as they are known in an LLC. Additionally, there are no restrictions on who is a shareholder as there may be with an S corporation. Thus, an LLC is similar to a corporation because it allows for protection from personal liability and simultaneously it is similar to a partnership because it allows for pass through taxation. Therefore, an LLC is commonly referred to as “hybrid corporation/partnership”.
As mentioned above, an LLC offers primarily two benefits. First and foremost, an LLC provides the members protection from personal liability. Additionally, an LLC provides certain tax benefits. That is, an LLC allows for pass through taxation. An LLC is similar to a corporation because it has a) limited liability; b) free transferability c) continuity; d) centralized management. The taxation of a limited liability company is comparable to an S corporation. However, unlike an S corporation an LLC can have an unlimited number of shareholders or “members” as they are known in an LLC. Additionally, there are no restrictions on who is a shareholder as there may be with an S corporation. Thus, an LLC is similar to a corporation because it allows for protection from personal liability and simultaneously it is similar to a partnership because it allows for pass through taxation. Therefore, an LLC is commonly referred to as “hybrid corporation/partnership”.
