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A limited liability company is a type of corporation, although most people use the terms limited liability company and limited liability corporation interchangeably. Technically, the abbreviation, LLC, refers only to a limited liability company.
A Limited liability company (LLC) is a business structure that offers limited liability protection and pass-through taxation. As with corporations, the LLC legally exists as a separate entity from its owners. Therefore, owners cannot typically be held personally responsible for the business debts and liabilities.
An LLC is not a type of corporation. In fact, an LLC is a unique hybrid entity that combines the simplicity of a sole proprietorship with the liability protections offered by starting a corporation.
Disadvantages of creating an LLC States charge an initial formation fee. Many states also impose ongoing fees, such as annual report and/or franchise tax fees. Check with your Secretary of States office. Transferable ownership. Ownership in an LLC is often harder to transfer than with a corporation.
For those thinking of starting an LLC, here are six of the main LLC benefits. Limited Personal Liability. Less Paperwork. Tax Advantages of an LLC. Ownership Flexibility. Management Flexibility. Flexible Profit Distributions.
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Finding negligence and wrongful acts Issue: An LLC will not protect a member from liability for his or her own negligent or otherwise wrongful acts that cause injury to another, such as assault or fraud.
Disadvantages Profits subject to social security and medicare taxes. In some circumstances, owners of an LLC may end up paying more taxes than owners of a corporation. Owners must immediately recognize profits. Fewer fringe benefits.
An LLC is best for a single owner and a primary vehicle for smaller businesses. Overall, LLCs are more flexible than Ltds in terms of structure. For instance, LLCs can operate with only one owner or more members of the group.
Ltd is a corporate ending used to signal to the public that its stockholders have limited liability. It is no longer used with corporations or LLCs in the United States because most states require another corporate ending after the names of those types of businesses.
Thus, forming an LLC will not protect you against personal liability for your own negligence, malpractice, or other personal wrongdoing that you commit related to your business.

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