As an entrepreneur, you may be thrilled to finally be launching your own business. You’ve worked for years for this dream to happen. Maybe the economic downturn last year forced you out of a job you held for years. Now, you face an important decision: What structure should you choose to operate your business?
One of the most popular business structures entrepreneurs choose is establishing a business as a limited liability corporation (LLC). The reason so many people begin their businesses as LLCs is that this structure comes with many advantages, including the following:
- An LLC is flexible. You can run an LLC on your own, with a partner or with multiple business partners. You can choose how to manage your business too. Plus, if you are an immigrant and not a U.S. citizen, you are allowed to establish an LLC.
- An LLC offers you better protection for your finances. When you establish an LLC, it is a separate entity. So, if your business fails, you won’t be responsible for paying your business debts out of your own pocket. Also, if your business faces a lawsuit at some point, you won’t have to use your personal assets to pay for a suit settlement.
- An LLC is not taxed as a business. Instead, you and other partners in your business will pay taxes on your income, not your business profits and your income (double taxation).
- An LLC is simple to establish and requires less record keeping than establishing a corporation.
- With an LLC, business owners have more flexibility in how they distribute their business profits and losses.
As you plan to launch your business, you should consult with a business law attorney. An attorney can help you decide if forming an LLC is the best option for your business. An attorney also can ensure you’ve handled other important legal matters: creating a partnership agreement if you need one and creating strong business contracts and employee contracts.
If you take the time to deal with these legal issues beforehand for your business, you likely will face fewer problems down the road. As a result, you can spend more of your time and money helping your business succeed and grow.