Home | Legal | Identity Theft
California is a high risk, high reward state for businesses. The market is potentially very profitable, but the risk of being sued for something is also high. An LLC may be the answer to the risk factor. Limited liability companies have been around forever, right? Nope. The first appeared less than 30 years ago in Wyoming. They were created to help small businesses. California is a notoriously bad place to do business given the taxes, fees and regulations. The state is also slow to acknowledge new business developments. In fact, it didn’t start allowing LLCs until the early 1990s. A limited liability company is much like Frankenstein, but in a good way. It takes the best elements of other entities and ties them together in a way that simply works. Few small businesses can withstand being sued, particularly if your personal assets are at stake. The LLC was designed to prevent losing your personal assets by providing the same liability protection found with a corporation. No business owner wants to be double taxed as can often happen with a corporation. The LLC resolves this by borrowing the tax classification of a partnership, to wit, finances are passed through to the owners. Before LLCs, many small businesses operated as partnerships. This created a bad situation since each owners’ personal assets were completely exposed to any business debts or lawsuits. The LLC resolved this by providing asset protection. At this point, you might think the LLC is the obvious choice if you are going to start a business. It often is, but there are a few exceptions. Here are two that come to mind. The great American business dream is to go public like Google and make billions. Well, that is not going to happen with an LLC. It has no shares, so you can’t go public! You need to be a corp, instead. Another potential problem has to do with taxes for a certain type of LLC. Many states allow a single owner LLC. The IRS requires that such entities have the owner file as a sole-proprietor, which means there is no real tax advantage. The LLC can be problematic in another way. Because it requires little paperwork or administration, owners can fail to keep up with even the minimum requirements. This can be dangerous if anyone every challenges the validity of the entity. The best entity choice for your business is highly dependent upon what you will be doing. The LLC is often the best choice for many, particularly in California, but make sure to get professional advice on the issue.
Article Source: http://www.fubrus.com
Find out more about California incorporation services. Feel free to grab a unique version of this article from the Uber llc article directory
Please Rate this Article
5 out of 54 out of 53 out of 52 out of 51 out of 5
Not yet Rated
