Organizing Limited Liability Companies In Houston
One of the most common business structures we see in our business law practice is the limited liability company (LLC). Combining the protection of a corporation with the simplicity and ease of use of a smaller organization, an LLC is arguably the most versatile way to organize a business. The Houston business attorneys at Brewer & Pritchard, P.C. have extensive experience with all the legal challenges surrounding limited liability companies.
Benefits and drawbacks of a limited liability company
Much like a corporation, an LLC is a legal entity distinct from its individual owner or owners. Organizing your business as an LLC has several benefits:
- The owners, called members, are not generally required to pay the LLC's debts with their own money. In other words, your personal assets are protected.
- For tax purposes, an LLC has significant flexibility. The members can choose to file as partners in a partnership or as a corporation. How the LLC will be treated for tax purposes is normally laid out in an operating agreement.
- Requirements for compliance are generally less stringent for LLCs than corporations, which means it's easier to form this type of business, easier to scale and easier to stay in good legal standing.
While LLCs are some of the most versatile business organization models available, they do have some drawbacks:
- Because an LLC is not treated as a separate entity for tax purposes, the owners are typically taxed on the company's income as though it were their personal income. This means the members pay taxes at the self-employment level rather than the corporate level.
- Unlike corporations, which generally have directors, managers and other well-defined roles, LLCs are vulnerable to confusion regarding who is responsible for making decisions, signing contracts and so on.
- Depending on your jurisdiction, your LLC may cease to exist if a member departs, which is distinct from a corporation in which the company continues to exist even if a shareholder departs.
All of these drawbacks can be combated if your LLC has a strong operating agreement. That's just one reason why you should consult with an experienced lawyer before organizing your business as an LLC.
Decades of experience advising Houston entrepreneurs
With over 25 years of service to the business community in Houston and nationwide, our law firm has the experience and resources needed to help you determine how to organize your business. We've worked with companies of all sizes and can recommend whether an LLC is right for your business - and, if so, how best to organize your operations.
Discover what our firm can do for your business. Contact us online or call (800) 445-8710 today.