The Virginia Limited Liability Company Surpasses The Corporation As The Preferred Entity For Business
In 1991, the Virginia legislature passed the Virginia Limited Liability Company Act which provided a new legal entity alternative for business owners in Virginia. Accordingly, most small business operated without the use of a legal entity and this created an unlimited personal liability situation for its owners. While there has always been the alternative of starting a corporation for business, the complication and compliance requirements of a corporation turned off many small business owners.
The Virginia limited liability company offered business owners the same liability protection as the Virginia corporation but with much more simplicity when it came to governance. For one thing, the limited liability company does not require centralized management or a Board and has no meeting mandates.
While more business people commenced forming an LLC in Virginia for the protection, some still did not because they did not know exactly what this legal creature was and did not really appreciate its many benefits. Also, the issue of taxation of an LLC was unclear back then and no one wanted to get in trouble with the Internal Revenue Service.
The tax uncertainty was eliminated in 1997 when the IRS came out with simple rules which allowed an LLC to automatically be entitled to a single layer of taxation. The tax choices and pass through default tax structure made the LLC a very attractive choice for business. If an LLC is single owned, there is no additional tax complexity so sole proprietors started forming limited liability companies to get the protection. Due to the increasing number of small business lawsuits, Virginia business owners now had a simple and easy to run business entity alternative for protection.
So now, for an affordable cost, a Virginia entrepreneur can get liability protection, an easy and easy to run business In recent years, the Virginia limited liability company has greatly surpassed the Virginia corporation as the entity of choice for small businesses in the Commonwealth.
If you like this post, buy me a coffee. Sphere: Related ContentTags: business
February 19th, 2009 at 2:23 pm
[...] link Sphere: Related Content [...]