Updated: Jan 5
An LLC is a business structure that protects its owners of the businesses debts or liabilities. LLC’s are popular amongst business owners because they allow flexibility and affordability while providing some of the same rights and privileges of other business formations.
While having an LLC does provide several benefits, not having an LLC comes along with some consequences. In this article we discuss some of the consequences of not having an LLC.
1. Not having an LLC makes you liable
One of the greatest benefits of having an LLC is that it protects business owners from being personally liable for debts or liabilities. This is very important when it comes to things such as lawsuits and other legal situations. Not having an LLC can make a business owner personally liable for any debts or liabilities that are incurred during the duration of the business.
2. More legal work
One of the key benefits of having an LLC is the ability to forgo extra paperwork. The process of setting up an LLC is simple and affordable when compared to other business formations such as an S-Corp and C-Corp.
3. Less ownership restrictions
When compared to S-Corp formations, LLC’s provide ownership flexibility. So what does that look like exactly? Well, in an S-Corp for example there is a shareholder limit of 100 shareholders but in an LLC you can have as many shareholders as you would like. That is why big name companies such as Apple and Google use the LLC format as their business structure of choice.
4. Avoid double taxation
The LLC business structure allows for businesses owners to avoid double taxation. Double taxation is a term used to describe a situation where business owners are taxed on their business profits and then personal income. Having an LLC provides business owners with the opportunity to only be taxed once.
These are just some of the many benefits of having your own LLC. If you would like to find out more click here.