Those considering a business formation in Louisiana might be wondering about the benefits of a limited liability company (LLC). An LLC is a business structure that must follow certain state statutes. Though these statutes vary by state, those who own an LLC are known as members. An LLC gives a business owner the limited liabilities of a corporation with the flexibility of being owning a sole proprietorship.
There is typically no limit to the number of members of an LLC and most states allow a single member. Depending on the number of members of the LLC, the IRS has different tax regulations. If there are many members, the IRS will treat it as a corporation; if there are only two members, the IRS will consider the LLC a partnership. An LLC prevents an individual from being taxed twice as some business owners might be taxed for profits made on their business and their own income from the business.
Those who are sole members of an LLC will typically be treated as a separate entity than the business. This may help protect an individual’s assets from being considered as part of the business should a lawsuit be filed.
Business formation can be an overwhelming time for many individuals who might not have the experience or background in tax law or asset protection. Many small business owners have great ideas on how to run their business but need help in working out the details of commercial law. A lawyer may be able to help a business owner who desired to know more about the LLC business structure. A lawyer might be able to help the owner form the LLC to protect his or her assets and limit their tax liability. This could potentially save an individual thousands of dollars and prevent losses in the future.