Limited liability companies

Let us now turn to the subject of limited liability companies, or LLCs for short. Before the conception of this type of company, the owners had to create a company with the legal structure of a corporation in order to protect their personal assets in case of lawsuits or to form a corporation. Both are considered legal entities isolated from their owners.

LLCs were created as a less complicated and expensive option than corporations. This has made them very popular and one of the most widely used corporations.

Characteristics of LLCs

For a coaching business this type of structure is the most advisable, since it is like a combination between a sole proprietorship and a corporation from a legal angle. It is viewed from this point of view as a business in its own right, separate from its owners.

Like partnerships or sole proprietorships, it is viewed as a temporary entity, which means that it does not pay taxes on its own. In this case all profits and losses are borne by the partners.

LLCs are much more malleable than corporations, and you can choose not to pay your taxes as a temporary entity and choose to do so as a partnership, only if advised by your accountant.

You should keep in mind that, in many countries, governments have established laws to lower taxes for companies and corporations. So you can take advantage of the advantages of the LLC, to keep the money inside the company at the end of the year and pay less taxes. That is why you should think well before forming the legal structure of your company and take into account all these factors.

Advantages and disadvantages of LLCs

Starting your business as a limited liability company has advantages and disadvantages. Below are some of them:

Disadvantages:

• Income can be used for tax purposes. In almost all cases, the owners of an LLC are taxed more than the owners of a corporation. This happens because not only the salaries, but also the income of the company is taken to pay taxes. In the case of corporations, only wages are taken.
• The owners have to record their income at the time. In the case of LLCs, their owners must announce their earnings immediately to their investors and shareholders. This means that all of the LLC's income is contained within the profits of each of its partners.
• Lower added profits. LLCs have less ability to offer their employees fringe benefits, such as health insurance, social security and others.

Advantages:

• Less corporate bureaucracy. In corporations, partners a