When you decide that you want to start a business, you may be focused on things like making sure you have a catchy name and ensuring your business can thrive in your area. While those are important, there’s something else that you need to think about – what type of business structure you’re going to use.
Some people opt to start out as a sole proprietorship; however, that doesn’t provide the same benefits as the limited liability company (LLC). An LLC is a distinct business structure that has some considerable benefits that you may find are worth the cost and effort of getting your company set up in this manner.
Protection of your personal assets
One of the biggest benefits of an LLC is that it clearly establishes your company as its own entity. It creates a division between the company’s business and your personal assets. This means that if someone were to sue your company and win, your personal assets aren’t at risk of being taken as long as you haven’t committed fraud.
Taxation method
Most people who establish an LLC use the benefit of pass-through taxation. This simply means that you claim the business’ income on your own personal income tax return. Small business owners in particular are fond of this benefit because they don’t pay taxes on the business’ income and then pay them again when they pay themselves a salary.
Ensuring that you have everything in order for your new business is critical. It may behoove you to work with someone who understands your industry and can help you with legal compliance as you get started.