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Five Reasons to Choose a Limited Liability Company (LLC)

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As we discussed in our last blog post (What business entity should I choose?), the limited liability company (LLC) has become the “go-to” vehicle for most contemporary business owners. Of all the forms of legal entities available today, the LLC offers the most attractive combination of liability protection, tax savings and organizational flexibility.

What are the advantages of the LLC for your business? Here are five great reasons to choose the LLC as your business structure: 

1. Liability Protection. 

The most fundamental risk any business owner takes is the risk that the venture won’t succeed. If it fails, the owner will be faced with unpaid bills, unsatisfied customers and insurance, tax and other liabilities.  How can you take on this challenge and yet still protect yourself against the unknown risks?

The law provides the answer in the form of certain entities that provide liability protection for their owners. These owners are liable for the amount of their investments, but nothing more; they are not personally liable for the debts of the business. The LLC provides just such protection, as does a corporation or (to a certain extent) a limited partnership.  But the LLC offers other advantages as well.

However, the liability protection is not 100% perfect. Take a look at our detailed video and post titled: 4 Simple Steps to Protect Your Business from Piercing of the Corporate Veil.

2. Tax Savings. 

A corporation will provide you with limited liability, but you will be taxed twice on its earnings: once at the corporate level, and once at the shareholder level. An LLC, by contrast, is taxed like a partnership: only the individual owners (“Members”) are liable for the business’ taxes. The entity itself is not taxed. Therefore, there is only one layer of tax, and the LLC owners thus achieve significant tax savings (especially if there is a rise in the corporate income tax rate).

3. Flexibility. 

Another advantage of the LLC is its flexibility:  unlike a corporation, the members of the LLC are free to organize their affairs as they see fit (subject to a relatively small number of statutory rules). Corporations, by contrast, are subject to significant statutory requirements that limit the organizational options available to them. While partnerships, like LLC’s, may be structured by contract, they either lack liability protection (general partnerships), or have structural requirements that make them less nimble than the LLC.  For example, limited partners enjoy liability protection and single taxation, but they cannot participate in the business. They’re effectively shareholders.  Members of an LLC, by contrast, can fully participate in the management of the business and affairs of the company.

4. Simplicity. 

Perhaps the most remarkable thing about an LLC is how straightforward it is to create one. As noted above, there are few statutory requirements in connection with the creation of the business, and once established, it is relatively easy and affordable to maintain. The key is that the LLC is a creature of both statute and contract, and the agreement among the members – called an “Operating Agreement” – is what determines how the company is managed and the business run.  The Operating Agreement is essential to the LLC and especially important with multiple owners. 

5. Continuity. 

Like a corporation, an LLC can exist in perpetuity; modern law provides that it need not specify an expiration date. Yet the LLC offers owners another attractive option – control over the future of the company. Since it is a creature of contract, the owners may specify how ownership interests in the company may be transferred or disposed of, and what rights the new owners will have vis á vis the current ones. Thus, on the one hand, you could provide for ownership options for high-performing employees – just like stock options – and yet, on the other, design a buy-sell agreement that would ensure that, in the event a member decides to leave, the remaining original members have a say in the future ownership and management of the company.

As you can see, there are a number of attractive reasons for choosing the LLC as the form of entity for your business. Of course, there are also competing considerations that must necessarily be taken into consideration.  At McCormick Law & Consulting, we specialize in helping clients navigate their way through these complex decisions, with a view to helping you create the structure that helps your business thrive. Call us today or shoot us an email so that we can begin to help you put your company on the path to success!

If you are starting a new business and not sure where to start, check out our video and blog post entitled: 6 Key Steps to Starting a Business

Client Reviews

We are proud to have more than 100 five-star reviews across Google, Avvo, and other platforms.
  • Being a first time business owner, you want to make sure you're making all the right decisions. Choosing McCormick Law & Consulting, along with Emma and Taylor, made the process so easy! Emma understood right away what my primary concerns were, and was able to execute everything in a very timely manner! She was extremely easy to talk to and she took the time to explain everything to me, settling my nerves with taking this next big step. Taylor made the process of making it all official completely stress free.
    Crystal G.
  • I am a criminal defense attorney licensed in both North Carolina and Virginia. I have taught attorneys across the State of North Carolina on varying trial matters ranging from jury selection to DWI defense. I definitely could have created my new business, Davis Wealth Management LLC, but boy that would have been a mistake. Because business formation is not an area in which I practice, I had no idea where my blind spots were, and let me tell you there were plenty. The knowledge I received from the firm is invaluable.

    John McCormick and his firm are very reasonably priced and quickly and efficiently assisted me in creating my new business. It was completely turn key; they did everything for me.

    I can't recommend their services enough. Also, huge shoutout to Taylor who kept me informed every step of the way!

    James D.
  • I highly recommendMcCormick Law & Consulting! My Father and I live in two separate states and the properties he needed legal services for are in Virginia. I reach out to Taylor on two separate occasions and she was very responsive and professional. The first time we used their services it went so smoothly that by the time I needed their services again I knew I could just send over the necessary documents, pay my invoice and rest assured it would all get taken care of. They eliminated the stress that comes with handling some else's affairs and I so appreciate that.
    Heather C.
  • From the the very 1st conversation with their office it was clear they would be responsive to all my questions and any support with my business. They are relatable and make their customers feel comfortable with any questions and or concerns that might arise while using their services. I am happy to have found them to support me with my small business needs!
    Lisa N.
  • I can't say enough great things about the professional team at McCormick Law & Consulting! We really had no idea of who to trust and who we could count on for quick and professional service in the Hampton Roads area for getting our new business up and running smoothly and the Team at McCormick Law & Consulting really knocked it out of the park with us!
    Jerry G.
  • I had the good fortune of working with McCormick Law on a business sales contract. I sent them the initial draft provided by the buyer along with a few notes about my specific concerns. They carefully went through the document and provided meaningful additions and corrections that better protected my interests. Thanks to Bobby and John for their personalized attention.
    Arthur B.
  • Mr. McCormick and his entire team were amazing! They assisted me in a legal matter concerning a business dispute. Mr. McCormick is highly experienced, ethical, dedicated, and was prepared to fight my legal matter in court if necessary. I thank the entire team for believing in me and would highly recommend them to anyone!!
    Jeanette L.
  • We used McCormick Law to start up another LLC and it was a great experience. I have used other lawyers and attorneys in the past and I experienced delayed responses and it was what I have come to expect.From the first interactions with Robert and his team, I was surprised to how responsive they were. I even mentioned to my new business partner that this was not normal and I was very happy.Needless to say I will be using McCormick Law for all of my business needs in the future.
    Colton S.
  • I utilized this firm for help on a real estate matter. I felt comfortable with the advice I received and am happy to continue doing business with them and referring others to the practice. Everyone I engaged with was welcoming and made the process very easy.
    Christian S.
  • John and his team were great to work with. They provided advice for starting my business and set everything up in an efficient and timely manner. I will definitely recommend them to others!

    Elizabeth H.
  • I contacted McCormick Law firm to register my moving service in NC. They did an outstanding job. Completed the process way sooner than I expected. Thank you, Taylor.

    Steve T.

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    McCormick Law, PC d/b/a McCormick Law & Consulting is a boutique business and real estate law firm located in Norfolk, Virginia & Raleigh, North Carolina, that seamlessly serves clients throughout Virginia and North Carolina. Whether you are a new or existing client of the firm, McCormick Law, PC, cannot represent you on any new matter until the firm has made a determination that there is no conflict of interest and that it is willing to accept the new engagement. The testimonials on this website reflect the real-life experiences and opinions of our clients. However, the experiences are personal to those particular clients, and may not necessarily be representative of all clients. We do not claim, and you should not assume, that all clients will have the same experience. Your outcome may vary.

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