The Advantages of Starting your Own Limited Liability Company (LLC)
16:14 10 August 2019
Incorporating a corporation is a very big and significant step for any business. Although it might look simple, it does take a lot of consideration about different key aspects that have a direct bearing on the success of a business. Throw in the different option/structures of forming a company, and that makes deciding how to incorporate your business no easy task. From taxes to liability protection to making sure that all requirements are complied with, business owners need to take the time to weigh up all the options in order to put themselves in a good position to be able to make the best right.
Of late, many businesses in the USA, particularly small businesses, are leaning towards choosing an LLC structure for there are plenty of advantages on offer. Here are some of the key advantages to operating your business as an LLC.
Protection of Personal Assets
From sole proprietorship to C corporation, there are many options for incorporating a business. Out of all options, if there was one that offered comprehensive protection of assets it would be Limited Liability Company (LLC).
A legitimate corporate entity, LLC offers significant protection from all the liabilities that you're likely to come across in your business, thereby shielding you from being held personally responsible for the liabilities of the business.
So if there is litigation against your company or your business files for bankruptcy, you as a manager or owner cannot be held personally responsible for anything. You need not have to pay off your personal assets to take care of your debts and that means your homes, cars, funds, bank accounts, investments etc will be completely free from risk. Simply put, your personal assets cannot be taken away by any means.
Not allowing creditors access to your personal assets is one clear, distinct advantage of LLC over other entities.
Fairly Easy Startup Process, Not Cumbersome at all
Forming an LLC doesn't require a lot of paperwork associated with other entities. The process is easy to understand and can be carried out all by yourself. What’s more, getting an LLC is as simple as paying a fee, filing the mandatory articles of organization, and making filings- most of which are quite straightforward and can be done online without any issues. Not a surprise given the fact that LLCs were originally formed to simplify the process of incorporating a business and make it less cumbersome.
LLCs are not only easy to set up but maintain and exercise control over as well; with an LLC, you can add or make changes to the structure of your members without having to worry about paperwork at all. By having the right members in pole position, you don’t have to worry about anything other than running your business. Just think about it- not having to create a formal board with directors, hold annual meetings with your shareholders or go through other complexities commonly encountered with incorporating your business. Think about the time and the opportunities it unlocks thereby allowing you to tap its full potential.
On the whole, if you like to keep things simple or have some sort of an aversion to going through complex formalities and bulk paperwork, then an LLC may be suitable to you and your business.
Note: This by no means indicates that you don't have to put a lot of effort into running your LLC. Take time to sit down and discuss with an expert to put together a robust operating agreement that allows for better management and stronger governance with regards to allocation of profits or losses, voting, authorizations and so on and so forth.
With an LLC structure, your business can either have its taxes treated as an S corporation or let all the profits pass through directly to the members' federal income tax returns. For a s-corporation, this means that self-employment taxes, particularly FICA and Medicare, are applied directly to salaries and wages. Alternatively, for a pass through tax treatment, all the profits and losses go to your members' personal tax returns, which has some key benefits. First of all, it makes filing taxes a lot easier. Secondly, it allows you to take a hit on your returns and decrease your tax burden should your business fails to turn a profit. Thirdly, it allows you to avoid double taxation, where you pay taxes at the corporate level and at the personal level.
Regardless of what you aim to choose, it’s a really good idea to consider the pros and cons of each method to see which one gives you more tax benefits.
Get Seen as a Credible Business
Credibility is invaluable to any business. Having an LLC following the name of your company could build a lot of credibility in your clients, vendors, and other stakeholders. Sure you can do that even as a sole proprietor, but forming an LLC can really go a long way in building real trust and creating genuine confidence.
For a business, there are many things to mull over at the time of incorporating a company but nothing comes close to actually selecting the right structure. Each structure- whether it be an LLC or an S corporation or C corporation, has its own share of pros and cons. Decide on the right structure for your business considering all relevant aspects. Setting up an LLC is a popular choice among small business owners these days and if you think it would be the right choice for your business as well, there are many experts that can help you with starting your own limited liability company today.
Incfile has an excellent track record for a service that helps companies incorporate their business. They provide expert guidance on how to go about incorporating your business and even do the heavy lifting for you by tackling all administrative tasks involved in the process. By opting for their services, you can be sure to receive updated and accurate information on the compliance requirements that need to be adhered to locally and the exact fee charged by the state for registering a new business entity. Over the years, they’ve helped many businesses across all states in the USA get incorporated in a quick and efficient manner, and have built the right protocols and procedures with their team to help your business get incorporated successfully. Check them out today to see how they can be of help on your quest to forming an LLC.