What are the Benefits of Structuring Your Business As An LLC?

One of the most important early decisions an entrepreneur will make is to decide on the corporate structure of his or her business. The choice of corporate structure will influence many factors tied to a company’s success, operation, and growth. An Illinois business law attorney can advise you on the popular Limited Liability Company (LLC) corporate structure. Here are some of the basics about LLCs and why so many people choose them. 

Liability Protection

As the name suggests, limited liability companies offer owners protection from personal liability if the company is sued over unpaid debts and other financial obligations. An LLC creates a separate business entity from the member/owners that separates personal finances from business liabilities. There are a few exceptions to this rule, including:

• Piercing the corporate veil: This may come into play when the owners do not follow LLC formalities. 
• Fraud: If an LLC owner acts in a fraudulent manner, that person may be sued. 

Tax Advantages

An Illinois LLC provides pass-through taxation. This type of structure operates unlike those of corporations and is a big benefit of structuring a company as an LLC because an LLC’s profits and losses “pass through” to its owners. As a result, LLC owners may file their earnings and losses in the LLC business on their own personal tax return and take advantage of specific deductions available to LLC owners. LLCs are also free to choose whether they wish to be taxed as a sole proprietorship, corporation, or partnership. 

More Flexible Management Structure

LLC owners can set up their management structure in multiple ways to suit the needs of the business. For example, LLCs may be manager or member-managed. An LLC may also appoint managers who are not company owners, which allows flexibility to give away management control without giving away any ownership. Likewise, LLC managers may be granted a great deal of responsibility, or very little. 

Fewer Corporate Formalities 

It is helpful to think of an LLC as offering the liability protection of a corporation, with the flexibility of being able to choose how the business is run. For example, LLCs need not host annual meetings and record-keeping requirements are reduced, unlike in a corporation. This is not to say that there are no corporate formalities. LLCs must still file an annual report and pay an annual fee. But there is far more flexibility with an LLC corporate structure.

Contact a Naperville, IL Business Law Attorney

Attorney Denise Gierach has extensive experience as an attorney advising companies on the complexities of the LLC corporate structure. It can be beneficial to speak to a Naperville, IL business lawyer from Gierach Law Firm, LLC about the most advantageous way to structure your business. Contact Gierach Law Firm at 630-228-9413 to schedule a meeting to discuss your corporate formation needs.