A Limited Liability Company (LLC) is sometimes also referred to as a Limited Liability Corporation, but the preferred term is "Company."
An LLC is not a corporation, but has some of the protection benefits that a standard corporation. You must also take certain steps to establish an LLC, which similar to those of incorporating, but the process is simpler. LLCs are fast becoming one of the most popular ways to structure a business.
- Advantages: The owners of an LLC are usually not personally liable for the LLC’s debts. LLC owners have the choice of paying taxes as a partnership, corporation, or sole proprietorship. For individuals who do not meet the criteria for an IRS “S” corporation, this may reduce taxes.
- Disadvantages: Many states levy a franchise tax or capital values tax on LLCs. As of January 2008, these states included: Alabama, California, Kentucky, New Jersey, New York, Pennsylvania, and Tennessee, levy a franchise tax. Texas replaced its franchise tax with a "margin tax," but it still serves as an additional tax if your business is an LLC.
You may need an attorney to help you form an LLC.
