The major feature of a limited liability company is that it limits the liability of the owners to the extent of their equity while excluding the personal liability from the general debts and other obligations of the company. This is unlike other forms of business ownership like a sole proprietorship in which the owners assume all liability for all of the financial obligations of the company.
All states in the United States of America permit the registration of a business as a limited liability company and there are a number of tax advantages that a limited liability company can look into as part of its business organization. A good tax lawyer can help any limited liability company find these savings and ensure that their business structure allows them to take full advantage of these tax breaks.
Other advantages of a limited liability company are that it offers much less paperwork and administration than incorporation and there are fewer requirements to keep records or hold formal business meetings or report to shareholders. Some disadvantages include the fact that a number of states are putting additional taxes or levies on limited liability companies and that in some cases it may be harder to raise money from outside investors than in an incorporated business.
The choice of how to register a business, particularly a small business, is dependent on the needs of that particular business. Some small businesses have a lot of income that needs special tax treatment, while others have limited resources and are forced to start their company as a sole proprietorship. If you have the ability always look to form your company as a Corporation of limited liability company for the benefits they provide.
To know which type of business registration is best for a small business it is always a good idea to check with a tax lawyer or a qualified accountant. They can review the needs of the small business and make a recommendation about the best choice for that particular business, one that minimizes costs while making the most of possible tax advantages.