Starting a new business in Ohio takes a lot of work, and there are a number of different things to consider. One is the type of business organization to choose. Options include sole proprietorship, partnership, corporation or limited liability company (LLC).
According to the Ohio Secretary of State, having an LLC limits the debts and liabilities of the members, which can be advantageous in a number of ways. An LLC offers businesses more flexibility than a formation such as a corporation, and it is often a good choice for businesses with a single owner. Because the members' personal assets are protected in most cases of litigation or business failure, it is a popular choice for a business organization.
An LLC does have some disadvantages, which should be considered when determining what is best for the company. According to the IRS, income that is passed down to the members is subject to self-employment tax, which currently is 2.9% for Medicare and 12.4% for social security taxes. An LLC is also a fairly new type of business entity, which means that there are fewer law-related regulations and cases on file in the event a legal issue arises.
Even with some disadvantages, the LLC remains a smart choice for businesses of many kinds. It avoids the double taxation that a corporation presents and it also provides flexibility in how money is distributed and the company is managed. Speaking with a lawyer is always a good idea when debating which entity is the best for any particular company, as many considerations need to be weighed.