Question

Explain why establishing an LLC as a business entity would be a good choice….how it can be setup….and what advantages it brings to the LLC members?

Answer 1

Answer:

LLC- LIMITED LIABILITY COMPANY is a type of business entity which a small business can think to incorporate. A LLC is much flexible than other legal entities. The laws for LLC are flexible and are formulated to provide small businesses a comfortable platform to work.

Forming an LLC for your business is advantageous because of :

LIMITED LIABILITY : Unlike the sole proprietorship and partnerships, the LLC's are considered as a separate entity from their owners. This means a LLC is responsible for its own assets and liabilities and treat the owners separately.

LLC form their foundation on the basis that the company and the person are two different entities. Hence the owner will not be liable to pitch in his personal assets to pay off the liabilities.

LESS COMPLIANCE BURDEN : The corporations have to have the annual general meetings, shareholder meetings, annual reports where a lot of paper is wasted and these compliance turn out as a burden for the companies, whereas LLC does not have such compliances, it does not have to mandatory conduct the annual meetings, or have such heavy paperwork.

It is not viable for a small scale business to waste too much of resources on such compliances, hence it is made flexible for the LLC in respect of compliances.

LLC is a comfortable business entity for any small business as it provides flexibility in various areas of compliances and many other tax benefits.