Should Your Business be an LLC?
You may have noticed that there are quite a few businesses in California that have the initials “LLC” at the end of their names. The Limited Liability Companies (LLCS) were likely established with the skilled guidance of a California business attorney. Limited liability companies represent just one of the business entity designations available to California businesses. The seasoned professionals at the Law Office of Kris Mukherji can help California business owners decide whether an LLC designation is the right choice for their business.
What is an LLC?
A limited liability company (LLC) is one of many business entity types available to businesses in California. Some LLCs have only one owner, while others have more than one. Like a partnership or a sole proprietorship, an LLC utilizes pass-through taxation. Pass-through taxation means that the profits and losses of the business are passed through to the owner, who then pays taxes on them. Owners do not have to pay taxes on the LLC’s income twice, once for themselves and once for the business. For this reason and others, the LLC is a popular designation for California businesses.
An LLC also has some features in common with a corporation. A corporation and an LLC both
have limited liability, which means that its owners are not personally financially responsible for the financial obligations of the company. If a judge orders a corporation or LLC to pay a certain amount as a legal settlement, the money can only come from the business itself. The law cannot require the owners to pay the settlement out of their personal assets.
Pros of the LLC Business Designation
- Flexibility of business structure: You can own the LLC by yourself or with partners.
- No double taxation
- Limited liability: If your LLC goes out of business, you will not be personally responsible for paying its outstanding debts. The same protection applies if someone sues
Cons of the LLC Business Designation
For many business owners, an LLC designation sounds like the best of both worlds — they can enjoy the pass-through taxation of a sole proprietorship and the liability protection of a
corporation. The biggest disadvantage to forming an LLC in California is that process of forming one can be complicated, and the requirements are strict. You will need an experienced California business lawyer to help you comply with all the requirements so that your LLC can operate legally and enjoy the highest levels of success.
Contact Kris Mukherji for Help Legally Establishing Your Business
The LLC designation is a popular business entity type, but it is not for everyone. Contact the Law Office of Kris Mukherji today for help choosing the best entity designation for your business.