Why Form an LLC

The first reason to form an LLC is the protection level that you receive as an owner of an LLC. The liabilities are limited to the investment that has been made by the individual owners and any other responsibilities, liabilities and debts are not considered the responsibility of the owner.

The second reason is an LLC can be set up with single ownership and a single investment. In a large number of cases, the members are treated as separate entities from the LLC. The economic benefits of the members need not depend on the interests of the members and hence the benefits are a separate entity and can be assigned accordingly.

The third reason is the privilege of a 'pass through taxation' unless otherwise opted for by the LLC is another factor in its favor. Besides this, the LLC is taxed at the personal level and not at the company level. Unlike the corporation form of business, the income generated from a limited liability company is taxed only once and no additional income tax is levied on the company. This is different from the taxation rules for a C-corporation form of company where the income is taxed at both the levels and is seen as both corporate and personal when the dividends become evident.
A relatively recent business structure, the LLC is allowed by state decrees and is supported well at the government levels.