You have options when it comes to incorporating your North Carolina business, and different business formation types offer different benefits and drawbacks. A limited liability company is a popular choice among many entrepreneurs who desire the protections a corporation offers, but the simplicity and ease of operation of a partnership.
An LLC is currently the fastest-growing business structure type in the United States. When you form an LLC, it may have as many members as you like. However, this type of structure has some important advantages and disadvantages that you should understand before moving forward.
Pros of the LLC
LLCs offer many benefits, and one such benefit is that this type of structure protects your personal assets if someone sues your company or secures a judgment against you. As long as you keep up with all compliance requirements, your home, vehicle and other personal assets remain protected. An LLC is also relatively easy to create and operate, meaning you do not have to complete extensive paperwork.
Cons of the LLC
Forming an LLC may have tax implications. If the government taxes your LLC as it does a partnership, which is typical, it sees you and other partners as self-employed. This means you are responsible for paying certain taxes, such as Social Security and Medicare taxes, yourself.
You may also run into trouble when you have an LLC if one of the members leaves the company, files for bankruptcy or passes away. Under these circumstances, you may have to shutter your company and create a new one.
A business law attorney may be able to help you figure out what business structure may give you your strongest shot at success and profitability. Please contact our firm for more information.