Today we will feature another installation in the ongoing series on types of home business. Last time, we looked at a limited liability partnership. Today we will have a peek at the limited liability company (LLC).
The LLC is another pass-through entity, but it has more flexibility than those we have discussed before (general partnership and LLP). It also, points out Taxgirl on Problogger, has liability advantages similar to those offered by a C corporation:
Even though the LLC offers pass through tax treatment, liability is
limited in much the same way as with a C corporation. This means that
so long as you follow the corporate formalities, as well as keep your
personal assets separate from your business assets, your liability will
largely be limited to your business assets.
One way you can do this is to separate your business account from your personal account. My home business is set up as an LLC. My income from my home business goes into a business account, and then I write checks to myself and my husband from the business account. These are known as "distributions."
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