A limited liability company typically does not pay taxes at their business level. Business income or loss of any kind is passed on to owners and is further reported on their particular personal income tax returns (Keenan, & Smith, 2000). All taxes are considered to be due at the personal level rather than the company’s. The formation of a limited liability company is bound to aid in the establishment of credibility with various potential customers, vendors, partners, and employees. This is owing to the fact that the formation of a limited liability company is generally viewed as a form of commitment to one’s business.
Credibility is the basis of all success in business. A limited liability company faces minimal state-imposed yearly requirements as well as ongoing formalities in contrast to other corporations. As much as the government is a necessary element for business to thrive in a country altogether, minimal government interventions are highly appreciated by business as such an opportunity allows a business to manage its affairs as best as deems fit. A limited liability company is free to create whichever organizational structure that is agreed upon by all the company owners.
It can be managed by managers or the various members of the company. They are authorized to make major decisions affecting the company. This is in opposition to the requirement of a board of directors in order for decisions to be made. Generally, a limited liability company suffers very few restrictions in terms of ownership. The question of who can be an owner in such a company, or even how many there are supposed to be is governed by considerably few restrictions.
The issue of transfer of selling of shares is a comparatively clear-cut process; this is in spite of the fact that existing shareholders are cosseted through their various preemption rights and also via company legislation that are in charge of safeguarding the minority investors’ interests. Additionally, the process of lending to another company is much easier in comparison with other forms of business. The lending bank could secure its loans against particular assets of the enterprise. In the case of a limited liability company, the selection of a company is strictly restricted (Pylodet, 1873).
Provided a selected name conforms to all the rules in place, there are restrictions that prohibit other parties to use it as well. This is as opposed to sole proprietors and partnerships whereby trademark legislation is the sole protection for one’s name.
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