There are many things that people should think about when they are planning on launching a new business in Texas. One of the crucial things in this process is to select the business structure that provides the greatest advantages to their business operations. According to some statistics, Limited Liability Companies or LLCs are the most common type of business entity in Texas. (1) On top of that, incorporation of LLC is not a difficult task. With the right help provided by true professionals like the ones from TaxPM, you should be able to finish this job without any hassles and in no time. LLC creates an ideal mixture of liability protection typical for corporations and flexibility usually found in partnership. It includes some of the best things from both worlds.
If you are still not sure whether you should select an LLC instead of a corporation, we will provide a list of advantages related to LLCs that should tell you whether your business is the right candidate for LLC incorporation/formation.
It keeps the personal assets protected
If you form an LLC, you will get a chance to keep your personal assets safe from the company assets in cases of company lawsuits. In other words, LLC keeps your personal assets protected at all time.
It can help you with taxation
This is another huge advantage of LLC incorporation because you will have an opportunity to select how exactly you are taxed. The tax rate associated with LLC is linked to the owner’s income. To put it in simple words, you can adjust the taxation and pay less in the end.
It avoids double taxation
As you are probably aware, corporations can’t avoid double taxation at least not completely. Namely, corporations are taking care of these taxes at the corporate level and after that, they are paying the taxes on the income which come in the form of dividends. But, LLC doesn’t have to deal with double taxation. You can file returns, but it’s better to rely on professional accounting services for this purpose.
Flexibility while doing business
In case you are managing an LLC, then you will have more options in how to manage your business. It’s possible to add new members to the business without following lengthy procedures. The main purpose of LLCs is to provide business owners flexible business structures that can help them run their companies smoothly.
It cuts IRS audit risks
When compared to a sole proprietorship, an LLC is at lower risk of audits. In case you are thinking about forming an LLC, then you should know that the risk of IRS audit is minimized. (2)
It allows leasing personal assets
Finally, it is possible to lease your own personal assets to your company. In other words, you can manage your LLC even from your home and report that the LLC is actually leasing the office space (your home) from you.
These are some of the things that make LLC a good option for those looking for the right business structure.
- https://www.sba.gov/sites/default/files/advocacy/Texas.pdf
- https://www.fool.com/investing/general/2016/03/26/here-are-the-odds-of-an-irs-tax-audit.aspx