The name of the Limited Liability Corporation is celebrated with a bang in the most renowned business houses of United Sates. There are no two opinions about the benefits these corporations have to offer to the most potential world of business corporate. The business experts have termed this business model as the most significant business concept till date. This business model has the flexibility and at the same time offers a number of tax benefits.
Options For Starting A Business
If you are about to start a business, then the most challenging factor is to decide upon the nature of the business enterprise you want o set up. Generally speaking, there are three main options available to you for choosing a business set up for yourself. The first one is the sole proprietorship, in which there is single owner of the business enterprise. In this scenario, the profits and losses affect only the single owner of business. He or she is solely responsible for the debts and taxes associated with the business.
The second form of the business set up is in the form of partnership. The biggest drawback of partnership business is that, each person is held responsible personally for the debts. Moreover, in the case of death of a partner, the business is prohibited from continuation. The third option available is that of corporations, that is capable of covering all the loopholes of the first two business set-ups.
The Hybrid Form Of Corporations
The limited liability corporations are considered as the hybrid forms of traditional corporations. These special corporations provide limited liability on the personal basis of each owner of the business. The laws associated with these corporations establish that individual members will not be personally liable for debts or other obligations of the company. As in the case of traditional corporations, an LLC is a separate legal entity that can work independently. An LLC must file the documents, which are technically termed as articles of organization, with the secretary of state and must designate a registered agent who is located within the state. It is also required that the formation of this corporation should be initiated by at least two members.
Analyzing The Flip Side
However, these corporations have some major drawbacks to offer as well. The first one is that there is no provision for free ownership transfers. The life of such kind of corporation is limited up to 30 years after which it comes to an end. The functioning of this corporation is also terminated in the case of some specific event. There are legal advisors, who are expert in practicing the business laws and thus, may provide you with the basic benefits and drawbacks of these corporations.
The limited liability corporation has become the buzzword in the business economy of United States. The successful business model is finding its roots in other countries too and is expected to rule the corporate world for many years to come.