Forming an LLC gives you a high degree of protection. Each owner’s personal assets are protected from business creditors because an LLC is a separate legal person from its owners. Only the LLC is liable for debts and liabilities acquired by the business. This serves to protect personal assets.

There are no limitations on the kind or number of owners for LLCs. S-Corporations, in contrast, are limited to 100 investors, all of whom must be residents or citizens of the United States. Any of these limitations do not apply to an LLC. Other corporations, foreign nationals, and other groups may both be owners/members.

Adding “LLC.” to the end of your company name communicates permanence, legitimacy, and stability to potential suppliers, customers, and lenders. By quickly showing people that your business is operating within the standards of the law and is registered by the state, you are much more likely to attract reputable business of your own.

One of the most important factors contributing to LLCs’ recent rise in popularity is the benefit of pass-through taxation. LLCs can be federally taxed as a pass-through entity such as a sole-proprietor, partnership, or an S-corporation. Pass-through taxes only impose one tax on profits made by an LLC.