This is the next article in the series on starting an Oklahoma business with confidence.  The last article dove into the vital differences between an LLC and a Corporation.  This article aims to discuss some of the advantages of a business that is set up as an LLC.  We hope that this short article is helpful in your entity selection journey.

Whether you took the plunge and decided to start the business of your dreams or expand an existing one, there is plenty of noise regarding what entity to choose.  Trying to think through the noise and make the right decision can seem daunting.  If you are in a similar situation and are seeking legal counsel for entity selection, entity formation, document execution, and related services, we are here to help.  Contact us online or by telephone to get in touch with a business law firm and speak to a business attorney.

Forming an LLC reduces members’ personal liability

This may be considered the most significant character of an LLC entity making it attractive to many business owners.  LLC affords its owners limited liability, which means that the owners (also called members) are not held liable for the business debt.  Imagine you own a flower shop in Edmond.  Now, if you ever face legal trouble from a client or a vendor, structuring the business as an LLC means that your personal assets stay off-limits.

An LLC avoids double taxation

An LLC avoids double taxation because it is a pass-through entity.  This means that the LLC’s profits are not taxed at the entity level, instead they are taxed only at the individual member level.  Thereby eliminating having to pay their taxes twice on the same income.  Imagine your car repair shop is structured as an LLC and made a profit of $25,000 in a given year.  Because it’s a pass-through entity, this sum isn’t taxed at the LLC level.  Instead, you, as a member of the LLC, pay your share while filing individual taxes.

An LLC allows for flexible management

An LLC offers a simpler management structure compared to the more intricate setup of a corporation, which involves a board of directors, officers, and shareholders.  It can be managed by its members or designated managers.  The voting rights, along with other rules, can be tailored or adjusted through an operating agreement.  For instance, a local bakery operates an LLC, where the co-owners, who are also the managers, take on the responsibilities based on their individual strengths.

An LLC enjoys perpetual existence

Generally, an LLC possesses perpetual existence unless otherwise stated on its articles of organization.  This feature allows for the business to survive and continue even if there are changes in ownership.  Particularly when the business is sold or when one of the LLC members passes away, this structure isn’t forced into dissolution as would be the case for a sole proprietorship.  For instance, consider a scenario where a sole LLC member and owner of a retail store, unfortunately passes away – the business may go on, presenting opportunities for an employee to purchase the business or for an heir to continue the family legacy.  This flexibility proves advantageous because it creates a valuable layer of stability for the LLC structure.

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Entity selection is an essential part of starting a business.  The type of structure you select bears tax, liability, management, and other implications.  If you are seeking legal counsel to assist you through entity selection, entity formation, and document execution, we are here to help.  Contact us online or by telephone to get in touch with a business law firm and to speak to a business lawyer.  Proudly serving Oklahoma County, Logan County, and Cleveland County.