The American dream is to turn nothing into something. This dream is epitomized in starting your own business from the ground up in hopes of become a huge success one day. Starting your own business is definitely both challenging and exciting; and though it requires and is filled with a great deal of planning and a number of legal concerns, you get to enjoy the sense of fulfillment when your planning comes to fruition.
There are different types of business entities from which a new business owner can choose, each with various laws governing how it is run and organized. As such, choosing between these many options, such as limited liability, an S-corporation, a C-corporation, or limited partnership, can be difficult; fortunately, by speaking with a knowledgeable professional, such as a business lawyer, you can get the information and guidance you need to determine which type of business formation is best for you budding company.
The Limited Liability Companies and Its Advantages
One popular business choice is a limited liability company, otherwise known as an LLC. Being something like a ‘hybrid’ business entity, an LLC combines some of the characteristics found in partnerships and corporations. Like in partnerships, an LLC allows the practice of pass-through income taxation, the practice wherein taxable income goes from the company level to the owner’s level. This practice is intended to eliminate the possibility of double taxation, wherein tax is imposed twice on the same income; first on the company level and, second, on the owner’s level. The main feature of a corporation that an LLC has, on the other hand, is the limited liability of owners, meaning they are usually not responsible for company accrued debts. Other business entities have differing taxation rules, so it is often wise to refer to the counsel of a tax lawyer before settling on one or another.
Owners of an LLC company are called members, of which there is no limit. A member could be an individual or a group of individuals, foreign entities, corporations, or other LLCs. Additionally, compared to S-corporation and C-corporation business types, there are fewer laws that an LLC is required to comply with, often making it a more advantageous business entity to choose. However, no matter what entity you choose, make sure you discuss your full range of options with an Austin business lawyer before making your final decision.