Advantages of Pennsylvania LLCs
An LLC in PA enjoys the limited liability benefits of a corporation, but also allows the management and tax flexibilities similar to a partnership or sole proprietorship.
Advantages of LLC includes:
- Reduced personal liability. LLC owners’ personal assets are protected in the event of a business failure or a lawsuit.
- No double taxation. By default, Pennsylvania LLCs are not subject to federal income taxes at the company level, rather they benefit from “pass through taxation”, in which the owners report their share of the profits/losses on their individual tax returns.
- Simple record keeping. Pennsylvania LLCs are not required to hold an annual meeting or publish meeting minutes like formal corporations are.
- Easy dispute resolution. LLC owners, called “members”, who have adopted an operating agreement, have written procedures for resolving disputes, for adding or removing members and for how profits are distributed.
- Added credibility. A company name which includes “LLC” or “Limited Liability Company” in its name indicates they are a business who has registered with the state. It conveys permanence and credibility to business contacts, customers and clients.
- Build business credit. Since the LLC is a separate business entity, it is possible to build a credit history for the company which is separate from the owners’ personal credit profiles.
Limited Liability Companies are popular among business owners because an LLC offers multiple advantages in addition to the tax benefits, personal asset protection, and business legitimacy. Advantages of LLCs in PA make them the most popular new businesses. 70% of new businesses in the state is an LLC in PA.