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What are the advantages of forming a limited liability company?

Whether you already operate a business or are planning to start one, you will want to read on in this post. Today, we will take a look at the limited liability company (LLC) and the advantages it brings to businesses. The most important thing you need to know about an LLC is that it combines features from corporations and partnerships built into a hybrid. LLC laws are governed in each individual state but recognized in all of them.

One of the ways that an LLC resembles a corporation is that it has limited liability. When a business registers as an LLC, it protects the owners from liability and business debt. This means that if the business compiles debt, that debt cannot be repaid by creditors going after the personal assets of the company's owner. Instead, any lawsuits asking for repayment of debt will target the business itself.

When it comes to taxes, the company is not taxed as a separate entity by the Internal Revenue Service (IRS). Instead, the taxes are paid to the IRS via the owners and their income tax. When the tax return is filed, it must be done so by selecting either partnership, corporation or sole proprietorship.

A business that registers as an LLC will see quite a bit of flexibility when it comes to profit sharing and investing. Owners of an LLC are allowed to invest in a different proportion than the percentage of their ownership percentage.

Forming an LLC is an excellent way to put your business on the right path for success. It also helps your business take advantage various tax laws and other operational issues in Orange County.

Source: Investopedia, "The Basics of Forming A Limited Liability Company (LLC)," accessed Feb. 16, 2018

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