What is a Pennsylvania LLC?
An LLC stands for limited liability company. It is a business structure which provides company owners, called members, to have limited liability protections against business debts or lawsuits, like the shareholders of a corporation enjoy.
An LLC can also have a business structure that more closely resembles a partnership or sole proprietorship, with less complicated tax and paperwork requirements than a corporation must file.
An LLC can have a single member or many. There is no limit to the number of members an LLC can have.
An LLC is considered a “pass through entity”, meaning that the profits are passed-through to the LLC members, who then pay taxes on their share of the profits on their own individual income taxes.
Therefore, an LLC does not pay federal taxes. The members file the profits/losses of the business on their personal tax returns.
Advantages of Forming a Pennsylvania LLC
A Pennsylvania LLC, or limited liability company, is a statutory creation. It is considered a separate entity in the eyes of the state and is created when the members file their LLC Formation Documents (see ‘Steps’ in menu) with the state.
A Pennsylvania LLC is the most popular business structure because of the asset protection it creates for its members.
Other advantages of an LLC include the lack of requirements to hold general meetings, the ease of pass through taxation, and the flexibility to set members’ own rules for operating procedures and profit distributions.