Advantages of Limited Liability Companies

At Gary Wachtel, we want to help our clients organize their businesses under an entity that provides maximum asset protection and minimum tax impact.  One of the ways to do this is with business succession planning, which is a strategy for passing on leadership roles.  This ensures that the business continues to operate after the company’s owners move on to new opportunities, retire, or pass away.  Although every company has different circumstances, one of the ways to do this is to incorporate your business as a limited liability company.

 

A limited liability company (LLC) is a legal status that can be granted to a business.  This business structure states that the business owners are not personally liable for the company’s debts or liabilities.  This not only protects the personal assets of family members, but it also preserves the assets of spouses and children when the owner passes away.  This way if an owner’s child, for instance, obtains the company, they won’t have to worry about also acquiring the company’s debt.

 

Due to this type of structure , business owners are referred to as members rather than shareholders.  One of the benefits of this structure is their flexibility with taxes.  This means that they can choose to adopt the tax regime of sole proprietorship, partnerships, S corporations, or C corporations.  Limited liability companies also offer their members and owners protection from being held responsible for the operations of their business.  For example, if an employee is participating in illegal actions inside the company, the company could be held responsible, not the owners.  This indicates that the court can ask the company to pay for the damage, but not the owners.

 

Some of the other advantages include pass-through taxation, no restrictions on the number of members allowed, flexibility in structuring the company’s management, and more.  All things considered, many companies could benefit from becoming a limited liability company.  Every company, however, should consult their New York real estate attorney before making any decision.  This is because there are some risks that come with LLC as well.

 

For more information about limited liability companies, contact our New York real estate attorney.

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