Perhaps one of the hardest decisions that entrepreneurs in Georgia face when preparing to launch a new business is what type of operating and tax strucutre to utilize. People can choose to establish sole proprietorships, partnerships, corporations or Limited Liability Companies. Over the years, LLCs have grown in popularity for many reasons but that does not mean an LLC is always the best choice. Understanding some of the reasons people choose LLCs can help entreprenuers decide if this is the right structure for their new businesses.
Simplicity may be one of the biggest benefits that draws people to the LLC structure. Forbes explains that from both a day-to-day operational and a taxation perspective, the paperwork and logistical requirements of an LLC are generally much less onerous than those associated with corporations, especially C corporations. This even includes an easier process whereby new members or partners may be added to the business.
When it comes to taxation, LLCs offer great flexibility. First, instead of both the business and the members being assessed taxes, only the members pay taxes. This is why LLCs are called pass-through entities because tax liabilities are passed through the company to the individual members. According to Entrepreneur, members who work in an LLC business can also deduct business losses on their personal tax returns which may help them reduce their tax burdens.
An LLC can also choose to be run as a Limited Liability Company but taxed like a C or S corporation. This may offer the owners benefits when it comes to Social Security or other employment-related taxes and deductions.