There are a lot of important decisions that come along with starting a brand new business.
From writing a solid business plan to choosing a business structure, you have a lot on your plate. You might even be thinking about starting an LLC to operate your new business under.
As a future business owner there are a number of business structures you can pick. Corporation, Non-Profit, LLC, and even a Sole Proprietor. However the LLC has caught your eye.
There are many LLC perks and why it is the most popular structure among business owners. Let’s take a quick look at the top 4 benefits of forming an LLC in the United States and why it is probably right for you.
Quick-Note: After reading this article you decide you’re ready to form an LLC, check out our step-by-step LLC setup guide and be walked through the entire process.
As the owner of an LLC, your business and personal assets are separate. This means that you are not personally responsible for the liabilities or debts of your business and creditors cannot pursue your personal assets (house, car, savings, etc.).
For instance if somebody gets hurt at your business’ location and wants to sue, the company might be legally responsible but not your personal assets that are untied to the LLC.
If you were operating as a Sole Proprietor for instance, your assets could in fact be in trouble.
Your LLC will have fewer requirements to adhere to for ongoing legal obligations. Spend less time tinkering with tedious legal procedures and more time building your business.
You will have many more requirements to follow to operate legally under those business structures at state and federal levels.
Limited Liability Companies typically don’t pay taxes as a small business. The taxes that are paid as business income or ‘loss’ pass through to you as the business owner. Any tax due is reported and paid on the owner’s personal tax returns.
That said, make sure you have an accounting software or accountant to help you keep everything in check.
Some entrepreneurs like to stay in 100% control with a single member LLC. This way you will have the flexibility to run things the way you see fit and have more protection than if you were operating as a Sole Proprietor with a DBA.
However if you have one or more partners in your LLC and would still like to stay in control, write up an Operating Agreement that sets the record straight and outlines who handles what in the business.
At the end of the day, choosing the proper business structure to operate under is critical. It will have a direct impact to how your business is run, taxed, and seen in the eyes of the government.
Not getting the business structure right the first time can cost you an arm and a leg in legal fees, wasted time, and a lot of stress. Choose wisely my friend!
Please note this article is for informational purposes only and does not constitute as legal advice. If you have any questions, speak to a lawyer. If you want to have an LLC filing service take care of the entire process, here are the top 7 options.