The title “limited liability corporation” sounds good to business owners, but what are the key benefits of an LLC? The main reasons business owners choose LLCs over S corps. are simplicity and flexibility. S corps. are subject to a number of strict requirements while LLCs are more relaxed, leaving you with more room to decide how to run your business. LLCs are beneficial because they:
- Have almost no membership restrictions;
- May be managed by members or selected managers;
- Do not require corporate formalities, though some are suggested;
- Can generally make tax-free distributions of appreciated property;
- Can make member-level tax adjustments for LLC liabilities;
- Can allocate tax benefits related to depreciation and losses without regard to members’ proportional ownership interests; and
- Provide greater protection in the event of a personal judgment against a member.