Is Creating an LLC the Right Choice for Your Business?
There are a variety of different ways to form a business in the state of New Jersey. Choosing the right entity for a business is important, which is why all options should be considered. Every entity comes with its own degree of liability and tax implications. A common type of entity that people choose can include an LLC. Continue reading below to learn more and contact a New Jersey business formation attorney for assistance.
What is an LLC?
An LLC is a Limited Liability Company. This is a corporate structure in which the members of the company cannot be held personally liable for the debts or liabilities of the company. LLC’s usually include the characteristics of both a corporation and a partnership/sole proprietorship.
What do I Need to Know About Business Debts & Personal Liability?
It is important to know that LLC’s can protect the owners of the business from any debts or judgements that it acquires during its lifetime. This means debts cannot pass on and become a new owner’s responsibility. In addition to this, business owners are protected from having personal liability if a lawsuit is filed against their business. While this is true, the protection is not absolute. This is because there are situations in which an LLC owner is, in fact, personally liable. This may be if there is a personal guarantee, if fraud or illegal activity is involved, or if the owner personally injures another party.
What are the Potential Tax Benefits of an LLC?
An LLC is considered what is known as a “pass through” tax entity. This means the profits and losses that are reported by a business can pass through to its owners. The owners report these profits and losses on their own personal taxes. While the LLC does not pay the taxes, it must file a Form 1065 with the IRS so they can be sure the members of the LLC are property reporting their incomes.
Contact our Firm
The Law Offices of Richard E. Novak, LLC has over 25 years of experience helping clients through tough times when they need it most. If you need assistance with any intellectual property, traffic violations, or business law matters, our firm is here to help. It is critical that you pick the right attorney who can protect your rights. Contact The Law Offices of Richard E. Novak, LLC for a consultation.