If you are starting a construction company, you wonder which structure is right for your organization. Learn more about LLCs and corporations before you decide. Here’s a look at pros and cons you can expect if you choose to start a corporation or LLC construction company.
What is an LLC?
An LLC (Limited Liability Company) is a business structure that combines aspects of both partnerships and corporations to offer protection from personal liability while being relatively straightforward and having less formalities than corporations. They’re increasingly popular among small business owners looking for protection from personal liability as they provide personal asset protection and are easy to set up.
Pros of Choosing LLC
LLCs may be beneficial to your construction company for several reasons, including:
Reduced formalities: LLCs do not require annual meetings or minutes, making them less burdensome than corporations.
Lower personal liability limits: That makes it easier for more business owners to qualify for the arrangement.
Easier setup: LLCs are hassle-free to set up when you compare it with other business structures. If you want your business off the ground sooner rather than later, consider an LLC.
Free from Liability: If you own an LLC, you are protected from personal liability. That means your personal assets are protected.
Tax perks: Profits and losses of your company are only reported on your personal tax returns.
Cons of Choosing LLC
Limited fundraising options: LLCs have limited fundraising options, making it more challenging to raise capital for their business.
Limited operating lifespan: Some states place limits on how long an LLC can operate, which could limit your ability to build long-term businesses.
Pros of Choosing Corporation
Protection from personal liability: Similar to an LLC, corporations provide personal liability protection for their owners and shareholders. Greater Fundraising Options: Corporations can issue stock or seek venture capital funding more easily than any other business structure, making raising funds for your venture simpler.
Longevity of existence: Assuming your company remains profitable over its lifespan, incorporation can provide a solid base on which to operate your construction company. Pros and Cons of Incorporating Your Construction Business:
More complex: Corporations require more formalities than LLCs, including annual meetings and minutes that can take time and money to hold.
Cons of Choosing Corporation
Double taxation: Corporations are taxed at both a business level and individually on any dividends distributed to shareholders. That means a lot of your profits go towards paying your taxes.
Hiring a Corporation Filing Service
Once you choose a business structure, it’s time to file reports. Hire the services of a corporation filing company to help you with this complex process. With a team of experts on corporation filing services, you won’t have to worry about paperwork mistakes that could get you in trouble with the government. You can rest easy, knowing you’re filing the right documents, not missing deadlines, and not paying too little or too much taxes. With a filing service, you can focus on your core business instead of worrying about reports.