Guide to Starting an LLC: Tax Benefits and Corporate Variants

The Limited Liability Company (LLC) is one of the most popular legal structures among entrepreneurs in Italy, thanks to its flexibility, advantages in terms of personal liability limitation, and opportunities for tax optimization. This article explores not only how to establish an LLC but also its tax benefits and the various variants available.

How to Set Up an LLC?

The establishment of an LLC begins with the drafting of a deed of incorporation and bylaws, which must be notarized. The steps include:

• Choosing the Business Name: Check the availability and uniqueness of the name with the Chamber of Commerce.
• Drafting the Deed of Incorporation and Bylaws: Documents that define the corporate purpose, share capital (minimum 1 euro for simplified LLCs), shareholders, and ownership stakes.
• Opening the Tax Position: Obtaining the tax code and VAT number, and registration with the business register.
• Deposit of Share Capital: Although there is no significant legal minimum (except for traditional LLCs, where the minimum is 10,000 euros), the capital must be deposited in a bank.
• Communication to Authorities: Registration with INPS and, if necessary, with INAIL, as well as the notification of the commencement of business activities.

Tax Benefits of an LLC

LLCs offer significant tax benefits, especially for small and medium-sized businesses:

• Separate Taxation: The company's income is taxed separately from that of the shareholders, which can result in a lower overall tax burden.
• Minimum and Flat Tax Regimes: For qualifying LLCs, it is possible to access favorable tax regimes that provide reduced taxation on income.
• Deductibility of Expenses: Many business expenses, such as salaries, rents, and management costs, are fully deductible, thereby reducing the taxable income of the company.
• Dividend Management: Dividends distributed to shareholders are taxed more favorably compared to other forms of personal income.

Types of LLCs

There are several variants of the LLC that can better suit the specific needs of entrepreneurs:

• Simplified LLC: Intended for young entrepreneurs under 35, it allows for a more affordable setup with a minimum share capital of 1 euro.
• Single-Member LLC: Allows a single shareholder to own 100% of the company while retaining the benefits of limited liability.
• Reduced Capital LLC: Similar to the simplified LLC but without age limits for shareholders, with share capital that can be lower than the 10,000 euros required for traditional LLCs.

Choosing the legal structure of an LLC and understanding the related tax benefits requires careful planning and often the advice of an expert. However, the flexibility and benefits offered by this corporate form make it an attractive choice for many entrepreneurs looking to start a business with a solid structure and potentially advantageous tax benefits.

If you want more details on how to reduce your business's tax burden, book your free consultation now.