What Does LLC Stand For?
When setting up a new business, you will come across many new terms, and you might be wondering, what does 'LLC' stand for? In this article, we take a look at what is meant by the term ‘LLC’ and consider the advantages and disadvantages of this legal business entity.
What Does LLC Stand For?
So, what does LLC stand for? LLC stands for ‘limited liability company' which is a type of business entity. Other business entities include sole proprietorships, partnerships, and corporations. An LLC is a business structure, like a cross between a partnership and a corporation. It consists of members and has a particular organizational structure with an operating agreement.
Advantages of an LLC
Forming your business as an LLC offers advantages. The owner of an LLC has limited liability. They are only liable for assets that they have personally invested in the business. Owners' personal property and finances are protected should anything happen. For example, if your business was to become in debt, you would not be liable for this from your property and savings.
When you have filed your articles of organization with the Secretary of State and received confirmation of your LLC, you can then apply for a business account. A professional business account can help when applying for funding and investment. Setting up your business as an LLC can offer tax benefits as well.
You can also find that an LLC offers credibility as it demonstrates a level of commitment to the business compared to a sole proprietorship.
Disadvantages of an LLC
Not everyone can set up an LLC, they’re not suitable for professionals such as dentists and doctors. Professionals will need to set up a corporation or a professional business entity and be licensed with the relevant professional body for their profession.
Any tax benefits may or may not be profitable, depending on your business. You will need to look into this. Also, it is important to consider the possible complications and limitations of limited liability. It also might not be as popular as a corporation for receiving investment.
Final Word: What Does LLC Stand For?
LLC stands for ‘limited liability company’. This is a type of legal business entity that offers the owner, or managers, limited liability. If you think this type of business setup is suitable for your new business, then consider the Legal Stepz course to help you work through your LLC formation with ease yourself.