Useful Advices - Business

With many of the perks of incorporation, without many of the headaches, it’s no wonder the flexibility of the Limited Liability Company ( LLC ) is gaining popularity with busin

According to USFDA, a combination product is one composed of any combination of a drug and device; biological product and device; drug and biological product

ess owners nationwide, and around the globe. But before you take that leap; is it right for your business?

Understanding the Limited Liability Corporation

The LLC is a type o

; or drug, device, and biological product and fixed dose combination would include two or more combinations of drug.

Examples of combination products may in

f hybrid business structure that offers many of the advantages of a corporation, but with the tax advantages and management flexibility of a partnership. It’s a popular choice

lude drug-coated devices, drugs packaged with delivery devices in medical kits, and drugs and devices packaged separately but intended to be used together.

for sole proprietors who want to protect personal assets or secure additional loans – and an LLC can be one of the easiest and least expensive forms of ownership to organize. T

here is enormous increase in the number of combination products entering the market in the recent years. Combination products have proven advantages but fixe

he limited liability company is now recognized in all 50 states plus the District of Columbia.

Sounds great, right? Well, it is for many businesses. But let’s take a look at s

d dose combinations are still in the process of convincing regulatory authority on their advantages over the single ingredient formulations.

Combination pro

ome of the advantages and disadvantages of forming an LLC.

Advantages of Forming an LLC:

• Liability Protection Without the Red Tape – Generally, there’s no personal liabilit

ucts have become life saving products for the pharmaceutical companies who doesn’t have many innovative molecules in their product pipeline and have been inc

y of members (owners) for business debts. And unlike a regular corporation, there are no requirements for regular stockholder meetings, board meetings, or formal minutes.

• No

easingly used in the product life cycle management. Even the companies having product patents are trying to extend their product life cycle through the combi

Tax – Unless you opt to be taxed, profits and losses are passed through to the members. With an LLC, there is no double taxation threat since a limited liability company is no

nation products and maximize the revenues. But the companies involved in this practice are overlooking that they are burdening the patients both economically

t a separate taxable entity. And for tax purposes, the allocation of profit and loss of an LLC doesn’t need to be proportional to ownership interests.

• No Citizenship Require

and physically. They need to rightly judge the benefits of the combination products and they have to even look at the risks involved when combining the produ

ments – You do not need to be a US citizen to own or invest in an LLC.

So why isn’t everybody hopping on the LLC bandwagon? Let’s be honest, nothing’s perfect – there will be

ts. Some of the combination products were well accepted by physicians while others suffered. Companies involved in development of combination products are fi

ome costs and headaches that stem from operating as an LLC.

Disadvantages of Forming an LLC:

• Increased Banking Costs – Accounts for small businesses or informal partnership

ding difficulty in defining their combination products and facing various challenges from selecting a combination to marketing it.

Following aspects would a

s are often free, as long as you keep a large balance. But a bank account for a limited liability company will probably come with fees $10, $20, or more each month. Something t

dd to the challenges in developing combination products:

Which markets to tap where the combination products can do fairly well?
Which combination prod

o keep in mind.

• More Complicated Tax Returns – An LLC will file its own tax return if operating as a partnership, C corporation, or S corporation. That means your return cou

cts are meaningful and rational?
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin

ld cost as much as a few thousand dollars each year.

• More Paperwork – Documents for a limited liability corporation must be filed with the state, unlike a general partnershi

tions increase the patient compliance?
What would be the developing cost?
How to tackle the risks encountered during combination product developmen

p. That means a little more red tape.

• Unfamiliarity – The limited liability company is the new kid on the block. Although this is quickly changing, some people are not as fa

t?

As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel

miliar with the LLC as they are with a regular corporation – something to consider when luring investors, etc.

So the question you should be asking yourself as a business owne

ping new procedures for reviewing their safety, efficacy and quality.

Professional from academic institutions, pharmaceutical industries, health care indust

r is, “do the benefits of forming a limited liability corporation outweigh the costs?” If you’re still not sure, it may be time to talk with an expert.

While LLCs are pretty

y and representatives from various regulatory agencies are working out to design the regulatory requirements for manufacture and sale of combination products

easy to set up by yourself, it might be worth your while to talk to an attorney or accountant about tax issues and the pros and cons of creating a limited liability company. An

.

As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de

other great option is utilizing an online incorporation firm. Many companies like The Company Corporation, for example, spe

elopment. They need to be wiser in analyzing the market trends and the regulatory requirements.

Companies that provide selfless information through particip

cialize in offering their know-how to business owners who need a little help. They can answer your questions and assist you in setting up your LLC for a pretty reasonable price

tion in industry events and feedback to regulatory authorities would be able to face the challenges and will be successful in developing combination products

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Useful Advices - LLCs: Do They Make Sense for Your Business?

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