A limited liability company (LLC) is a type of formal business entity that many owners select for their companies. As with all types of business entities, there are pros and cons to an LLC, and you should thoroughly discuss whether an LLC is right for you with a business lawyer in Atlanta.
Benefits of an LLC
Unlike a sole proprietorship or general partnership, an LLC is a separate legal entity from its owners. This means that the owners are generally not held personally liable for the debts and obligations of the business. There are some exceptions, however, which we will address later in this article.
Another pro of an LLC is that owners have flexible tax options. You can elect pass-through taxation like a sole proprietorship, or you can be taxed like a corporation, whichever makes the most sense for your situation. In addition, an LLC does not require the extensive paperwork, board elections, and meetings as a corporation, and you can form an LLC relatively quickly.
Possible Downfalls of an LLC
The limits on personal liability are not infallible. There are different situations in which an LLC owner can be held liable for debts of the business, including:
- The owner personally caused harm or losses
- An owner personally guarantees a loan and defaults
- The owners do not act like the business is a separate entity, and they commingle business and personal funds
- The harm arose from an owner’s recklessness or fraud
- The owners do not properly withhold employee taxes
Contact Our Experienced Business Lawyers in Atlanta to Learn More
At Battleson Law, LLC, we work to help clients select and form the right entity for their enterprise. We can help from the start and continue to guide business owners on a variety of matters. Call 404.382.8149 or contact us online to set up an appointment today.