When you are starting a new company it can be a daunting prospect to face so many different choices. It can be an overwhelming feeling to be faced with several business structure options. It is important that you conduct adequate research before making any big decisions in relation to your business. Here are some reasons why starting an LLC company could be a great choice for you.
LLC companies make it possible for a business to have multiple owners or members. These owners all benefit from having limited liability, and they all share their losses or profits.
Special allocation of profits
LLC companies also allow the special allocation of profits. This means that profits can be split to the advantage of all owners tax-wise.
Health insurance deductions
If you are a manager of an LLC company then it is possible for you to deduct 100 percent of all health insurance premiums that you pay.
The disadvantages of starting an LLC company
There are, however, some disadvantages to starting an LLC company that you should be aware of. Unfortunately, if you are a member of an LLC company, you cannot pay yourself your own wages. It also means that the bottom line profits can't be judged as earned income, therefore this is not advantageous tax-wise.
If you are considering starting an LLC company then you should take everything into careful consideration and get expert advice if you think it is necessary. You should also look into successful companies in your industry and consider how they structure their business.
Source: Entrepreneur, “Pros and Cons of the LLC Model,” David Meier, accessed Dec. 08, 2017 Business Law