Anyone who has taken an “Intro to Business” course has likely heard the different types of business entities. You might even remember learning that LLC’s are typically the best option for small businesses. If you’re looking to start a business, it’s wise to have a basic understanding of small business law and the protections that a Limited Liability Company provides.
What makes a Limited Liability Company so great?
The greatest benefit to this type of business entity is that it protects a business owner from being held personally liable for the company’s debt (thus the name). This means that creditors cannot pursue an owner’s personal assets to pay business debts. This protection is not provided under a sole proprietorship or partnership.
What about business taxes for LLCs?
LLCs usually do not pay taxes like other businesses. Owners of an LLC report any business income or losses on their personal income tax returns. These taxes are then paid at the individual level.
Does an LLC limit the way a business is structured?
Not at all! LLCs are free to organize in anyway the owners believe is best. They can also be managed by the owners or by designated managers. This is a major difference from corporations that have a board of directors and officers that handle the day-to-day operations and make decisions about the company.
Starting a business is exciting, however, it is important to have legal guidance throughout the process. The Minneapolis business lawyers at KTF Law have helped many Twin City business owners with a range of legal services. Whether you have questions about business lending or need help with agreement drafting, our Minnesota attorneys will start you down the right path with a small business consultation.