Benefits of Using a LLC Structure for Your Texas Business
Small businesses are doing well in Texas, and entrepreneurs may find LLCs offer the right balance of protection and ease of use.
Small business is booming in Texas. The United States Small Business Administration (SBA) reports that 98.7 percent of all employers in the state are considered small businesses; this translates to 46.4 percent of the private sector workforce. More specifically, small businesses jumped from 364,013 in 2000 to 389,129 in 2010.
Entrepreneurs looking to take advantage of the opportunities for small businesses in Texas will likely consider protecting their interests with a business formation. There are many business structures available that can benefit entrepreneurs, including sole proprietorships, limited liability companies, general partnerships and corporations.
Although sole proprietorships may be the most common and simplest structure, it does not offer personal protection. Those that move forward with this structure could put personal finances, property and future financial security at risk. Limited liability companies, or LLCs, may provide a better alternative. This business structure can offer personal protection and many additional advantageous to entrepreneurs. Some potential benefits include:
- Protection. Arguably, the biggest benefit of an LLC is protection. A limited liability corporation protects the members from liability. In most cases, the members are protected from personal liability for the actions and business decisions of the LLC.
- Taxes. The SBA notes that LLCs are not taxed as separate business entities. Generally, profits from an LLC are only taxed at the shareholder's level. Taxes are "passed through" the business to each shareholder, owner or member. This information is reported on the LLC members' personal federal tax returns. This is in contrast to corporations, which are generally taxed twice: once for the corporate tax and a second time at the shareholder level.
- User friendly. Compared to some other business structures, an LLC is fairly easy to operate. In fact, the SBA lists the operational ease and minimal recordkeeping requirements as one primary advantage of an LLC.
These are just a few of the consideration to take into account when moving forward with a business formation. Determining whether an LLC or other business entity is right for your entrepreneurial needs can be a difficult decision. As a result, those who are looking to expand their business and protect their interests are wise to seek the counsel of an experienced business formation lawyer. This legal professional can discuss the benefits and risks of each structure, help determine which is best for your interests and assist in preparing all the required documentation to move forward with formation.