Here are things to consider when you’re asking yourself if you should form an LLC. Forming a business as a limited liability company helps ensure the following.
- Forming an LLC helps protect you against being sued in court. If you don’t want to lose your house for the actions of your business, this can be a huge deal.
- Forming an LLC helps reduce paperwork that your company has to do. An LLC is known to reduce the amount of paper trail you may have with other legal entity types.
- Forming an LLC helps prevent yourself and your company from being taxed twice. No one enjoys double paying personal and business taxes.
- Forming an LLC makes your business look more credible to potential customers and lenders who you may ask to be your creditors. 3,000,000 LLCs are formed each an every year. Being a part of one makes your company look more official.
There are other types of company structures that you may want to consider. Other business structures in the united states include the following.
- General Partnerships
- Sole Proprietorships
As mentioned earlier, nearly 3,000,000 LLCs are formed each and every year. Even though their are other business designations you can choose as a business owner, LLCs tend to offer the right mix of advantages for business owners. They are simple but also provide the risk mitigation that most practicing business are looking for. Sole proprietorships and general partnerships don’t protect your personal assets in the event that you get sued. Corporations are quite difficult to set up while conversely Limited Liability Corporations are easy to form and maintain. In addition, LLC’s aren’t subject to double taxation.
One of the biggest advantages of forming an LLC is that it is the easiest way of choosing S-Corp tax designation. This is because they are more simple to maintain than C-corporations.
Did you know
Unlike many other structures of business, LLC’s have choices available to them in how they are taxed. A popular way to be taxed as an LLC is as an S-corp. S-corporations are not a type of business. They are a tax designation that offers the most flexibility and advantages to LLCs.