Limited Liability Company (LLC) |
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Healy Consultants can incorporate a limited liability company in every country in the world. The Limited Liability Company (LLC) was created as a streamlined alternative to the corporation. The LLC originated from the German Gesellschaft mit beschrenkter Haftung (GmbH) founded in 1892, it quickly spread throughout Europe and Latin America. More recently, in 1977, the United States introduced their first Limited Liability Company legistation. |
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What is a Limited Liability Company (LLC) |
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Generally, an LLC is suitable for smaller business owners, and has garnered significant popularity in recent years. Similar to corporations, owners of an LLC have limited liability for the debts and actions of the business entity. |
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For all intents and purposes other than offering limited liability, an LLC functions like a partnership. |
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| 1. | Owners are usually called members; their liability is limited to their investment in the company, thus protecting their personal assets. |
| 2. | The protection offered from forming a Limited Liability Company gives the owners peace of mind in knowing they are not personally liable for the company’s debts. It is important to note that limited liability does not mean owners have a guarantee of full protection from personal liability. |
| 3. | Note that not all businesses can be established as an LLC. For instance, those in the banking, trust and insurance industry, sectors that are usually state-affiliated, but this may vary from Country to Country. |
Limited Liability Company (LLC) Taxation |
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Limited Liability Companies are taxed similarly to a sole proprietorship or partnership; even though it offers limited liability it is considered a collective entity with its owners for taxation. |
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| 1. | The company is therefore not taxed. |
| 2. | The owners pay taxes on their respective profits. |
| 3. | There are methods to restructure your taxes enabling the LLC to be taxed similarly to a corporation if this will better suit the company’s needs. |
Advantages of a Limited Liability Company |
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| 1. | Setting up an LLC is simple, and can be established with only one individual’s involvement. |
| 2. | There is much less paperwork in comparison to other business entities, such as a corporation. |
| 3. | The company is a flow-through entity (a legal entity in which the income passes through to the owners and investors), and is effectively treated as the income of the investors or owners. This avoids any double-taxation, unless the LLC opts to be taxed as a corporation. |
Disadvantages of a Limited Liability Company |
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Start-up capital may be harder to raise for a Limited Liability Company, as investors tend to feel more comfortable with the larger goals of a corporation. |
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LLC laws differentiate between jurisdictions. For instance, company law in some jurisdictions may stipulate that an LLC is treated as a corporation for tax purposes when undertaking international business. |
Other information |
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See this page for more details on Healy Consultants' Corporate Services. |
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Contact Us |
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For more information on Limited Liability Companies, contact email@healyconsultants.com or call us (+65) 6735 0120. |
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