The limited liability company is a comparatively new type of business entity that remains popular because of some benefits that arise from the existing regulations and legislation. There are several advantages that explain its topicality and its consideration as a beneficial option. First, it suggests special pass-through tax treatment that helps to avoid double taxation, excluding cases when members decide to select an alternative tax classification (“LLC Advantages and Disadvantages”).
For business formations, it means the improved opportunity to generate benefit and, at the same time, avoid unnecessary complications and sophistication of accounting. The given approach can be considered as fair as LLC, because of its popularity, engages more people in business and provide them with increased flexibility if compare with a traditional corporation (“LLC Advantages and Disadvantages”). LLC members can also enjoy liability protection for their personal assets and benefit from the guarantees of stability and continuous growth.
In such a way, for owners, the switch to this form of business can guarantee that an advantageous position can be acquired due to the improved forms of taxation and the solid protection of their assets. As far as an LLC does not pay income tax itself, it might be attractive to various actors looking for different options to start their own venture. At the same time, it can be an inappropriate choice when the primary objective of a founder is to transform into a publicly-traded company (Kenton).
For competing entities or other taxpayers, LLC remains a form of business that acts regarding the existing legal environment and pays taxes according to the established regulations (Kenton). In such a way, the discussed type of business has its advantages and disadvantages that should be taken into account by founders when running their own projects.
Kenton, Will. “Limited Liability Company, LLC.” Investopedia, 2020. Web.
“LLC Advantages and Disadvantages.” Nationwide Inc. Corporations. Web.