BENEFITS OF CONDUCTING YOUR BUSINESS AS A LIMITED LIABILITY COMPANY
Benefits of a Limited Liability Company
When starting a business, what form of business entity is right for you? In setting up your business planning, it is imperative to first understand the options available to you and resulting consequences both in your asset protection and tax planning. There are various types of business entities available under Arizona law.
Conduct Business In Your Individual Name
You can do nothing at all and conduct your business affairs in your personal name. This is not a good choice. You have personal liability exposure, you can be sued individually and all your assets can be taken. You have no asset protection. In addition, this is poor tax planning and you will end up paying more in Federal and State taxes.
Conduct Business In a Limited Liability Company
It is frequently best that clients utilize a Limited Liability Company as the form of business entity to be created in the setup of your business affairs. Limited Liability Companies are very similar to corporations without the complications of annual reports and annual filing fees that are required for corporations. For this reason, we will focus on the benefit of a Limited Liability Company from an asset protection and tax planning perspective.
Therefore, Limited Liability Companies are a much better option to conduct your business. Limited Liability Companies provide liability protection to your individually and asset protection of your assets from creditor attack. In addition, if set up correctly and completely, a Limited Liability Company provides substantial tax savings.
The New Arizona Limited Liability Company Act
Arizona recently enacted the New Arizona Limited Liability Company Act (LLC Act), which became effective September 1, 2019 for all new Limited Liability Companies and September 1, 2020 for all existing Limited Liability Companies. There are significant changes in this new Act that provide huge asset protection benefits which you need to be aware of. In addition, there are critical new requirements in order to preserve your asset protection that you need to be aware of. One such requirement is the necessity for a complete Operating Agreement containing the provisions in the new LLC Act. This is essential to all clients first forming a Limited Liability Company as well as existing LLC’s. You should contact us at (520)797-1400 for a free consultation and obtain additional information on this topic.
Benefits of a Limited Liability Company: Asset Protection
Limited Liability Companies provide the same asset protection as a corporation under Arizona law. A Limited Liability Company shields you and your personal assets from business liability. Limited Liability Companies have very flexible ownership and management structure. It is imperative to understand that you must choose to be a “manager-managed” Limited Liability Company for proper and complete asset protection planning. This is the most frequent mistake we see in Articles of Organization filed with the Arizona Corporation Commission by clients who previously retained such legal service entities as Legal Zoom, with no legal advice and support in understanding the options and consequences of the choices you make.
Benefits of a Limited Liability Company: Tax Savings
Another benefit of the Limited Liability Company is the ability to be what is commonly known as “S-Corporation” or “Small Business Entity” for tax purposes. Do not let the word “corporation” confuse you. Your entity will still be a Limited Liability Company for state structure purposes; however will be taxed as an S-Corporation for Federal and State income tax purposes. Almost all Limited Liability Companies should elect to be treated as a Small Business S-Corp or Sub-Chapters Corporation to minimize their Federal and State tax liability.
Complete Planning in Establishing Your Limited Liability Company
Simply filing Articles of Organization (what other legal document preparers charge a minimum amount) does not serve you best in your asset protection and tax planning. In order to take advantage of asset protection and tax planning benefits, there is additional coordination and work involved. This back-end work is frequently not done by what we consider cheap legal document preparers services. Don’t be fooled by low up front document preparation fees. It will cost you much more in the long run.
ALTA Estate Services Provides Complete Asset Protection and Tax Planning Services
ALTA Estate Services, LLC is a team of professionals including tax preparers capable of providing you with the education, knowledge, and experience to be serve your legal needs in the areas of asset protection and tax planning. This is critically important and can save you a lot of money in taxes in your future business endeavors. Do not create any business entity without a full analysis and understanding of the business entity structures available to you and the resulting asset protection and tax planning consequences.
Want further information? Have questions? We are available to discuss these points with you at no charge.
We are ready to draft your Limited Liability Company immediately. Contact us or call us at (520) 797-1400 to discuss any questions you may have and provide us the necessary information to complete your documents.