By Jennifer Reuting

Everyone seems to be going crazy over limited liability companies (LLCs), and for good reason. The LLC is one of the most flexible entities — you can choose how to distribute the profits, who manages the business’s day-to-day affairs, and how the profits are taxed. The LLC also offers a lot in terms of liability protection (hence the name limited liability company).

Overall advantages of the LLC include

  • Personal liability protection: Any creditor who comes knocking or lawsuit filed against your business can’t affect you personally. You can rest assured that no matter what happens to your business, your family’s assets are safe.

  • Business liability protection: An LLC is one of the only entities that prevents personal lawsuits and creditors from liquidating your business to satisfy a judgment (in most instances).

  • No ownership restrictions: You can have as many owners as you need. Even other entities can be owners!

  • Flexible management structure: Owners can manage and managers can own — you decide. You can also outline the scope of each manager’s power to handle important issues.

  • Flexible tax status: You can choose from a multitude of ways to be taxed, depending on what works best for your situation. Structured as an LLC but want to be taxed like a corporation? No problem!

  • No separate tax returns: With a standard LLC electing partnership taxation, the business’s profits and losses are reported on your personal tax returns. Your LLC simply files IRS Form 1065, an information statement.

  • Flexible profit distribution: You decide what percentage of the profits to give to whom — no matter how much of the company each person actually owns.