The Limited Liability companies have been around since the late 70’s but only recently have they become a popular format for the small-business owners. Business setup services in Dubai have the capacity to help organisations wanting to become an LLC. LLC is a hybrid format that combines features of partnerships and corporations. You can enjoy liability protection without having to remit double the tax. The earnings and losses are passed on to your tax returns. Indeed, this one of the many advantages of being an LLC. However, on the flipside there are some disadvantages. The purview of this article is to enumerate the various advantages and disadvantages of the Limited Liability Corporation (LLC).

Advantages

Limited Liability

This means that you will only have to risk the capital that you’ve paid into the business. Your personal assets won’t be going down when there are business debts or liabilities that are due. However, if you were to give a guarantee on a debt, then you are relinquishing you limited liability

Simplicity

This is simplicity with regard to tax. Like said earlier, this is great because all profit and returns are reported on to the owner’s personal returns. There will be no separate business tax imposed on you, unless of course there are more than one member, when the taxations resembles that of a partnership. Since there exists no double taxation both the business and shareholders are not taxed.

Flexible

There are entities called “members”. These are equivalent to the shareholders and can be anything from an individual, shareholder, or a corporation itself. Management can be shared with these members and when you are at a situation where thing s are going awry, you can rely on the expertise of these members to help you get through it.

Distribution

Unlike other corporation structures, distribution of profits and losses are not dependent on the proportion of the money put in by each individual. This advantage means that everyone is equally given responsibility of profits and losses.

Disadvantages

Stock

If you plan to create a company based on money being raised through the public or investors, then the LLC should not be the one you’re aiming at. It is so because these people would like to get some stocks and shares in their hands that you might not have in good supply. When you do decide to give a percentage of the ownerships to outside investors, you must decide whether they’ll be part of the management team.

More than one

Sometimes according to where you are, you will need to be having more than one member of an LLC. If that is the case, then there will be certain amount of friction between either two parties.

Incentives

This is the case when you want to give incentives to your employees so that they do a great job. You cannot motivate with monetary benefits to a great extent as there are no way you can deduct the costs of a benefit. Since there are no stocks either, you can’t use that either.

The Paperwork

The LLC will have to file articles of organization with the corporation of Dubai, and will also have to draft an operating agreement listing member’s rights as well as the responsibilities. There is further more paperwork for employer ID (relatively easy), quarterly reports, withholding, and tax deposits (protracted). It is not essentially impossible but it is hefty.

Taxes

Depending upon the country or the state that you are in, you will have to pay taxes on being an LLC. One of the types of taxes that you will pay is the self-employment tax. The self-employment tax is levied on your profits instead of your salary.

Advice

It is best if you were to make this decision gradually as possible and not something that you should do alone. Taking an advice from a specialist will help you a lot in choosing whether to become an LLC or not.  There are several business setup services in Dubai who are comprised of business setup consultants who can heed you with the perfect advice and help you setup your business.