The Benefits of Forming an LLC: Is it the Right Choice for You?

The Benefits of Forming an LLC: Is it the Right Choice for You?

What is an LLC?

An LLC is a Limited Liability Company, which is a corporate structure where the members of the company may not be held personally liable for the company’s debts or liabilities.  Usually, LLC’s incorporate the characteristics of both a corporation and a partnership/sole proprietorship.

LLC, Business Debts, & Personal Liability

One of the most important or attractive features of an LLC is that the LLC can protect the owners of the business from the debts or any judgments that the business acquires during its time.  This means that debts may not pass over to become the owner’s responsibility.  Also, business owners can be protected from having any personal liability in the event a law suit is filed against their business.  However, protection is not absolute as there are instances when an LLC owner can be personally liable such as if there is a personal guarantee, if fraud or illegal activity is involved, or if the owner of the LLC personally injures another person.

Potential Tax Benefits of an LLC

An LLC is considered a “pass through” tax entity.  This means that the profits and losses reported by a business, pass through to its owners.  It is the owners that report these profits and losses on their own personal taxes.  While the LLC does not pay taxes itself, the LLC does file a Form 1065 with the IRS so they can ensure that the members of the LLC are properly reporting their income.

If you would like to know more about LLCs, need help with their formation, or if you need legal advice regarding if an LLC is the right choice for you, it is important to contact an experienced business law attorney.

Contact the Law Offices of Richard E. Novak today to discuss the facts and circumstances surrounding your New Jersey traffic violations, intellectual property or business litigation matters.