You can start a business using multiple different formations. Sometimes, people start a business with another person and create a formal partnership. Other people decide to form a corporation with ownership shared between multiple interested parties or investors.
Establishing a limited liability corporation (LLC) offers the most benefits with the least hassle possible. What are some of the benefits you can derive from choosing an LLC as your business structure?
LLCs offer tax benefits
If you are the sole proprietor of an LLC, then the revenue from the company doesn’t get taxed as business income. Instead, it passes through to you and is therefore subject to individual income tax rates. There are many opportunities within the system for you to minimize your tax liabilities.
Personal property protection that LLCs afford you
Your assets are vulnerable if someone brings a legal claim against you. You limit the risk of plaintiffs suing your company or creditors that your business owes money to coming after your personal assets when you choose an LLC as your business formation over other options.
The separation between personal property and business assets will make it harder for individuals or the courts to seize them to turn them over to creditors to cover your business debts or judgments. Provided that you maintain separate finances for the business and accurate corporate records, creating an LLC reduces your personal financial risk.
An LLC gives you a professional appearance
Running an informal business out of your garage will not necessarily convince potential customers or clients that you offer a professional service or a valuable product. The more official and organized your business seems, the more trustworthy it appears to others. Having an LLC helps establish you as a real, legitimate business, even when you first launch it.
Creating an LLC when you start a business can help you keep your costs low and protect yourself during a time that is traditionally fraught with risks.