This is a structure where the business is separated from its owners and the ones who manage it. This also means that if the limited liability company has only one individual acting as the owner and the manager, the company is a legal entity. A good example of this is an individual I met recently while traveling. He owns Auto Towing in San Mateo. Oscar has always structured his business as an LLC due to what if offers.
Having this legal entity, the company can enter into agreements, contracts and can be sued on its own. In an event that the company issued, the owners cannot sell their personal assets to clear the debt unless they are culprits or they are the company guarantors.
Also, the legal entity means that the owners of the company cannot withdraw money from the company anyhow they want. The company has the ability to own assets and keep profits after taxation.
Another thing that a limited liability company enjoys is tax advantages. Seek more knowledge on this rule so that you can use it on your advantage. The company can continue to operate even if the owners no longer exist. This ensures that the employee job is not affected. If the owners were the managers of the company, the decision can be made quickly to allow quick transition and business operations running smoothly.
Types of limited liability company
The two types of limited companies do exist:
Public limited liability
This type of company can raise capital by sharing shares to the public. As a result, the company’s shares can be traded on national stock. The structure is more common in well-established businesses.
Private limited liability
This type of business cannot offer shares to the general public. It is common for small businesses.
Registering the limited company varies from state to state but here are some of the common requirements;
- The full names of the company and the addresses
- The company’s directors
- Details of the company’s capitals and shareholders
Once the company is registered you have up to three months to register for corporate tax. If the registration exceeds the set timeline it attracts a fine. It is a requirement by the law that all the limited companies pay corporation tax even if they are eligible for other taxes such as PAYE, VAT and so on.
After you’ve created your corporate structure you might want to think about a business trademark. It can be important in protecting your brand.