What are the benefits of an LLC?

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.
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