Nevada Corporate Resources - Nevada Corporate Resources
Advantages of an LLC
Limited Liability Company
The limited liability company (LLC) is a unique form of business that blends the characteristics of corporations, partnerships and sole proprietorships into a simple and flexible business entity that many small business owners prefer. Why?
Asset Protection - Puts a legal shield between you and your creditors. As a completely separate entity, LLCs separate the owners from the business itself. There is no personal liability for any LLC debts even if they relate to a contract. The operating agreement can, for the most part, contain any procedures and rules that the parties desire and once put in place can just sit there maintenance-free. The initial drafting of the operating agreement is very important because it must comply with state and IRS regulations so that the LLC will be taxed as a partnership and not as a corporation.
Tax Advantages - An LLC legally separates the business from its owners (like a corporation), yet it can elect to be treated as a partnership for tax purposes.in this case, the LLC doesn't pay any tax itself - the income is passed through to the owners as with partnerships. The tax rules governing partnerships are more flexible, allowing for more flexibility in tax planning. Your specific situation will dictate whether an LLC or a corporation offers the best tax advantages for you.
Ability to Raise Capital - When you start an LLC, it is simple to bring new owners (called members) on board, and there is no limit as to how many can be involved. These additional investors can be individuals, corporations, trusts, and pension plans, none of which even have to be in the same state or in the U.S. (Of course, you can form either a Nevada LLC or a Nevada corporation in this pro-business state without ever setting foot here!)
Easy to Run - The LLC entity was formed around the principle of the freedom to contract. This basically means the owners only have to agree among themselves how the company will be run and the agreement will be held up in court. As an LLC, resolutions, amendments, meeting minutes, and annual board meetings are not required by law, as they are with corporations.in fact, in most states, owners of corporations that do not comply with these requirements lose the asset and liability protection typically provided by a corporate entity. Nevada, though, is unusual in that the corporate veil* can only be pierced in the case of fraud, even if these corporate formalities are not performed. Again, your specific situation will dictate whether a Nevada LLC or a Nevada corporation will work best for you. For when an LLC is most appropriate click here.
Limited Liability Company
The LLC entity can be used to hold property and transact any type of business. An LLC is a flow-through entity. It passes all of the LLC profits and losses directly to the members of the LLC.individual members are therefore taxed at their personal tax rates.
LLCs are owned by members, which are like shareholders in a corporation. Unlike S corporations, the LLC can have an unlimited amount of members. A member's ownership interest in the LLC is referred to as a 'membership interest'. It is like stock in a corporation. All members of an LLC can manage the business; A manager can be an individual, a partnership, a corporation, or, in some states, such as Nevada, even another LLC. This offers tremendous flexibility for estate planning and asset protection.
This is not to say that building business credit cannot be accomplished with a sole proprietorship or partnership. At Nevada Corporate Resources we will work to build your credit, no matter which entity you choose.
Disadvantages
• Federal Security Limitations: The LLC is only available to privately owned companies. If a company were to go public, it would have to be a C corporation. With merger laws, it would be relatively easy to convert a Nevada LLC to a C corporation.
• Loss of Pass-Through Tax Treatment: This occurs when an LLC is viewed as a corporation, which happens when there is an election filed with the IRS and the LLC qualifies for three of the four criteria that define a corporation. If it is taxed as a partnership, pass-through treatment still applies for taxes.
• State Tax Treatment: Some states impose an income or franchise tax; however there is neither on a Nevada LLC.
Nevada Corporate Resources - Contact us today at 1.866.305.4188
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