When starting a new business, you’re staffed with the responsibility of making a variety of important decisions. Before you ever open your doors to the public, it’s critical to choose the appropriate business structure.
While you have many options to consider, a limited liability company (LLC) is among the best. Here are some of the many reasons to learn more:
- Limited personal liability: Running a business as a sole proprietor effectively means that you and your entity are one in the same. So, any business debts you accrue are also personal debts. And any issues that come to light in regard to negligence could result in putting your personal assets at risk. As the name suggests, an LLC is designed to limit your personal liability by separating you from the business itself.
- Tax advantages: If you decide to form an LLC, you can then choose the tax status that makes the most sense. Options include partnership, sole proprietorship, C corporation or S corporation. Above all else, you have the opportunity to use pass-through taxation as a means of avoiding corporate taxes.
- Less paperwork: There is paperwork associated with starting and running any type of business, but it’s not nearly as extensive with an LLC. For example, when compared to a C corporation, you’ll find that you’re saving a lot of time and money here, as recordkeeping requirements are minimal.
- More flexibility regarding how you run your business: This is a benefit that many people lose sight of, as they don’t think far enough down the road when starting a business. With an LLC, you have a greater level of management flexibility, as you’re not required to implement a formal structure, such as with directors, as you would with a traditional corporation.
There are pros and cons of every business structure, so it’s critical to compare the finer details before making a decision. While you can always make a change in the future, doing so will cost you time and money. Subsequently, you may never get around to doing what’s best for your company.
An LLC isn’t always the best choice, but with widespread benefits it’s a structure you want to consider.