As a business owner, choosing the vehicle to launch your company is one of the most important decisions you will make. One of your options is a limited liability company (LLC), which has many benefits and distinctions from other business structures.
To learn how an LLC can work for you, contact a seasoned attorney at Sparks Law. Our Alpharetta limited liability company lawyers can explain the tax advantages and flexibility that this structure provides.
Like a partnership, an LLC is a pass-through entity when it comes to taxes, which means that LLC profits are passed to members to be taxed as personal income. Corporations pay corporate taxes, and any income passed to shareholders is also taxed through double taxation. Although rare, an LLC can choose to be taxed like a corporation, allowing for more flexibility.
A Limited Liability Company gleans benefits from corporations and partnerships. However, LLC owners, otherwise known as members, are not liable for the company’s debts or lawsuits, as is standard in a sole proprietorship or partnership. A skilled attorney at our Alpharetta office could explain how a limited liability structure might benefit a particular company.
Because LLCs are more flexible than corporations, they are a popular choice for business owners in Alpharetta. At formation, LLC members are allocated a percentage of the company, depending on their initial contributions. According to the Georgia Code Section 14-11-401, these contributions can be capital, property, or services.
To form an LLC, owners should:
Unlike corporate bylaws, an operating agreement is optional for LLCs. However, it is advisable for companies with more than one member to adopt an operating agreement. This is the governing document that spells out members’ responsibilities, how the company will be managed and how profit will be distributed. It should also address the procedure for admitting new members, buying out departing members, and electing a tax structure.
Any facet of a limited liability company can be covered in an operating agreement. The document is an invaluable roadmap for the company’s growth and gives definitive answers should disputes arise. An Alpharetta lawyer at Sparks Law can help LLC members draft agreements that address all the relevant areas of concern.
If a business owner plans to interest numerous investors or take the company public, they should choose to operate as a corporation. Corporations gain investors through stock sales, and the number of investors can be almost limitless. On the other hand, a limited number of members buy into an LLC. Corporations trade on stock exchanges, while LLCs do not.
Although LLCs are not generally double-taxed, the pass-through self-employment tax for members could be higher than the corporate tax rate. A knowledgeable attorney could review the company books for an Alpharetta business to determine if there might be any tax issues when choosing LLC status.
When you charter a business in Georgia, you have many decisions to make, including the best operating vehicle for your needs. You should consider how many investors you want, the tax strategy that appeals to you, and how much flexibility you want in compliance issues.
At Sparks Law, our legal team understands the benefits and drawbacks of different types of entities, and we are available to discuss them with you. If you are considering chartering an LLC, we could explain why that option might be right for you. Call our Alpharetta limited liability company lawyers for your initial consultation.
