We started an LLC company but not sure if this is the route to take.

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We started an LLC company but not sure if this is the route to take.

We are starting a small local
for the moment transport
business. We have 1 truck. We
are in the beginning and
wondering if LLC is the right
step to take.

Asked on July 7, 2017 under Business Law, Colorado

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 3 years ago | Contributor

If you don't want an LLC, you can just dissolve it (instructions for doing so will be on the department of state website for the state in which you created the LLC) and then set up whatever business structure you want instead, like a partnership or corporation.
However, there's no reason to do this: an LLC is the best option or structure for you:
1) An LLC, or "limited liability company," will protect the owners (called "members") from most business debts or obligations or liability--that is, only the company could be sued, not the owners personally. The protection is not 100% perfect (you have to pay any debts you personally guaranty; the member in charge of payroll or or sales taxes can be held personally liable for those, if the company does not pay; you are liable if you personally do anything wrong [so if you run someone over while driving a company vehicle, you can be sued because you ran the person over, not because you are a member]), but it still is much more than you'd get from any other structure other than corporation.
2) With an LLC, you can take the same "pass through" or "disregarded" tax treatment as a subchapter-S corporation gives you, so as to avoid double taxation: your profits are taxed with the members' other income (if any), instead of being taxed once at the business level, and then again when distributed to the owners; and business losses can be used to reduce your income taxes.
3) An LLC involves less formalities and paperwork than a corporation.
There are good reasons why LLC has become the most popular business structure for a small business.


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