Starting an LLC gives entrepreneurs more flexibility for future plans

When forming a company, one question an entrepreneur spends a lot of time thinking about it what legal entity they should choose. Smart Business Network contributor Mark Klimek says that filing an LLC will give the company the flexibility it may need further down the road.

But even with careful planning, as a company expands, it may outgrow the original plans of its owner – who will want to convert the business into another type of entity. But converting the entity can be either more or less complicated – depending on what format it was incorporated as.

Converting an LLC or S corporation can often be done without any major tax complications, Klimek writes. But to perform the process the opposite way – turning a C corporation into an LLC – generally ends up being a taxable conversion.

That flexibility is probably one of the reasons that many more small business owners are choosing to start companies using an LLC format. A recent report in the Fordham Journal of Corporate and Financial Law found that the formation rate of new LLCs was more than double that of traditional corporations.ADNFCR-3052-ID-19907982-ADNFCR

Melissa Clark
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Melissa Clark

Head of Content & Customer Marketing at Incfile
Melissa sets the vision for Incfile's content marketing and customer relationship management. Melissa has more than 10 years experience in various marketing roles, and a passion for supporting small businesses as they incorporate and grow. She loves sharing information that will help business owners maximize their LLCs, Corporations and Nonprofits. In her spare time, Melissa is an active member of The Junior League and enjoys running half marathons.
Melissa Clark
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