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What are the advantages of Limited Liability Corporation?
Some advantages of limited liability corporation are:
- Tax Advantages: Florida LLCs have "pass-through" tax status, which avoids the double-taxation issues of C corporations. A C corporation must pay taxes on its income and individuals must pay taxes on the dividends they receive from the corporation. This can lead to double taxation on dividends that are paid out of corporate profits to the owners. Members of LLCs report the LLC's profits and losses directly on their tax returns, therefore they are only taxed once.
- Limitation of Liability: Similar to Florida State corporations, LLCs shield personal assets from business debt. LLC members typically will not be liable for the debts and obligations of the LLC because, in most cases, the LLC is viewed as a separate entity in the eyes of the law.
- Fewer Formalities: The Florida State Department of Corporations requires many formalities for Florida Corporations that it does not impose upon Florida LLCs. While corporations are required to follow many legally mandated formalities, LLCs have a more informal structure which makes them easier to maintain.
- Subsidiaries Allowed. LLCs are allowed to have subsidiaries without restriction, whereas being a Florida S corporation places limits upon having subsidiaries.
- Management Similar to a Florida Partnership: The management structure of a Florida LLC is much like that of a partnership. This allows the managing members to decide how the LLC will be run and to enter into an agreement formalizing this decision. Members can also appoint "managers" to run the LLC.
This list just highlighted the major advantages of limited liability corporation, view other sites to learn further advantages of limited liability corporation.
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