What Are the Advantages of an LLC?


Quick Answer

The primary advantages of an LLC, or Limited Liability Company, revolve around its liability protections, flexible profit sharing and marginal record keeping relative to other business formations. Also, the personal assets of LLC members are not subject to the actions or business decisions of the LLC.

Continue Reading
Related Videos

Full Answer

The members’ personal assets are exempt from legal proceedings filed against the LLC or debts incurred by the LLC. Similar to liability protections afforded to shareholders of a corporation, members or owners of the LLC only face the loss of their capital contribution to the underlying business.

Establishing and running an LLC requires less administrative work than other corporate structures. Filing articles of organization to establish an LLC asks only for the LLC’s name, identity of its members, location of its offices, duration of its business and any state-required information.

Members of an LLC enjoy the ability to determine how profits are allocated under the entity’s operating agreement. Unlike other business formations, an LLC does not distribute profits based on capital contribution rates or percentage of ownership. This payout structure provides greater flexibility for the LLC’s members, as they are free to distribute profits to their liking. It is solely up to the LLC’s members to decide how to split the profits or losses of the business.

Learn more about Business Resources

Related Questions