When forming a new business, it’s important to make the right decision for personal liability as well as minimizing the company’s tax liability. A limited liability company is a relatively new option and designed to give entrepreneurs another option for a business entity. There are some advantages to forming an LLC as opposed to other options. This article looks at some of those advantages and disadvantages of filing for a limited liability status.
What is a Limited Liability Company?
An LLC is a business entity that is formed under state law. Some regulations can differ by state but the basic rules are similar from state to state. An LLC is similar to a corporation when it comes to personal liability of the company’s owner(s). Where income tax liability is concerned, an LLC can be treated more like a sole proprietorship or partnership.