The limited liability company combines the limited liability advantage of a Corporation with the protection of your ownership interest. Yet, there are essential reasons you should prefer a Limited Liability CO. (LLC) or corporation to the Limited Partnership:
– As with an S corporation, you can avoid double taxation with a Limited Liability Company. And, the Limited Liability Company can avoid the C-Corporation’s corporate income tax, should you so choose. Income from the Limited Liability Company can be singly taxed to its members, as with a partnership. You may also avoid state corporate franchise tax by using an LLC.
– Importantly, you incur no personal liability with a limited liability company. As with a corporation, LLC managers and members are personally protected from the creditors of the LLC, even when the members actually manage the company
-In contrast, general partners of a Limited Partnership are personally liable for partnership debts. Moreover, the limited partners of a Limited Partnership cannot participate in managing the partnership without incurring personal liability for partnership debts.