Here you are, just starting in business. Things are going well. Then some disgruntled person decides to file a lawsuit or collect money from you far beyond what your business is worth. The good news is that under the terms of an LLC only your business assets are susceptible to creditors. Your assets are safe.
You may have heard that turning your company into a limited liability company (LLC) is a surefire way to protect yourself from creditors and lawsuits. Easy and affordable, it is a widely used legal mechanism roundly suggested for small businesses and startups. Its benefits, however, far exceed just being sued by creditors.
Benefits of an LLC
For those thinking of starting an LLC, here are six of the main LLC benefits:
- Limited Personal Liability
- Less Paperwork
- Tax Advantages of an LLC
- Ownership Flexibility
- Management Flexibility
- Flexible Profit Distributions
Now let’s talk about the different types of LLCs and how you can use them.
8 Types of LLCs
While the benefits apply to the various types of LLCs, you should be aware that there are different LLC structures designed for various business purposes, not exactly cottage industry startups.
- Single-member LLC. The most popular for sole proprietorship (solo entrepreneur)
- Multi-member LLC. Has one member, but apart from that setup is like a single-member LLC. The only difference is all members must agree on and sign an operating agreement.
- Domestic LLC and Foreign LLC. A business formed within its home state. A foreign LLC is formed as a legal entity that does business in a jurisdiction or state other than the one in which it was created.
- Series LLC. Comprises an umbrella or parent LLC and smaller LLCs within its control, known as series LLCs or cells. Each series/cell has its members/managers, assets, and purpose. Each one is a separate entity within the parent series LLC.
- L3C Company (low-profit LLC). A hybrid was created to attract philanthropic capital and private investment in ventures designed to generate profit and benefit society.
- Anonymous LLC. Enables the formation of an LLC legal structure without providing the identity of the owners, managers, or members. This aids in minimizing legal liability and protects your privacy by keeping your ownership out of the public record.
- Restricted LLC. Benefits those seeking lower tax rates when transferring assets to family members. It isn’t meant for conducting traditional business dealings and is only helpful for people with multiple properties.
- PLLC and LLC. A professional limited liability structure works in much the same way as any other LLC entity, reducing the risk to owners, members, and managers from personal liability and providing equal flexibility regarding management structure and pass-through tax.
All of the various LLCs may not be legal in the state of Texas. When choosing one, you’ll need the expert advice of a business attorney.
Choose The Voeller Law Firm
Now that you understand that an LLC is far more than a simple protective entity for small businesses and startups, it may be time to consider one for your business or organization. The Voeller Law Firm is here to help you decide which one is right for you and get it set up. Contact us by calling (210) 651-3851 or using our online contact form to send a message and set up a consultation.
We serve San Antonio, Schertz, and the surrounding communities of Bexar County.
19311 FM 2252
San Antonio, Texas 78266