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Is an LLC the Best Fit for Your Entity?

In a recovering economy, many entrepreneurs may think of this as a prime moment to form a business entity and catch increasing consumer dollars. One tech startup, QuickSprout, is dedicated to providing entrepreneurs insight on business formation and a recent post explains why filing an LLC might be the best move to make for a new company.

To start, QuickSprout reports the flexibility of an LLC is one of its main advantages. An LLC can be operated in a number of ways that might appeal to businesspeople. It can run as a corporation with a board of managers and officers, it can be a general partnership with all members designated as “managers,” or it can function more like a sole proprietorship – with one individual appointed a manager.

This flexibility also extends to the tax preparation required. An LLC can be taxed as a C or an S corporation. No matter how entrepreneurs choose to be taxed, they can benefit from pass-through treatment with an LLC. QuickSprout explains that LLC profits and losses flow directly through the entity to the individual members – meaning members can write off certain company losses and avoid double taxation.

The one drawback to an LLC is that it is often considered less appealing than S corporations with respect to garnering venture capitalist funds. Nonetheless, a report from the Center for Venture Research at the University of New Hampshire indicates business owners might have little luck securing venture capitalist funds in 2010 regardless. Entrepreneurs might consider other lenders – such as community banks – for their financing needs” or something.

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