Establishing a vending business chain as a limited liability chain has significant benefits. The key benefit to the owner is limited liability, where by his or her own assets are protected in case of significant liabilities incurred by the company. The owner’s assets are therefore shielded from being used as collateral in case of debt incurred by the vending business chain. The owner’s liability is limited to the investment he or she had made to the vending machine business chain.
Another benefit of operating as a limited liability company is the pass-through tax principle. Limited liability companies do not pay tax at the corporate level; however taxes are passed through to the members of the company who then include these taxes in their individual tax returns. This means that the company’s profits are considered to be the owner’s personal income. The taxable income attracts a lower rate in comparison to the tax rate that would be charged at the corporate level.
The owners of a limited liability company can establish any organization structure that they feel suits the vending business chain. They can manage the vending business themselves in comparison to a corporation where the owners have to select a board of directors to set the strategic direction for the company. This increases the flexibility within which the organization structure of the vending business chain will be set. It also reduces the bureaucracy that is normally experienced in corporations with board of directors and managers enhancing the decision making process. For example the owners can agree on how to divide profits as opposed to a corporation where shareholders and the board of directors set guidelines on wage levels for managers.