One of the first decisions you have to make when you start a business is the type of structure you’ll use. Some people choose to start out with a sole proprietorship, but that’s not the only option you have.
A limited liability company (LLC) is another one of those options. Understanding a few things about this may help you to determine if this is the best option for you.
1: Formal establishment
Getting your business set up as an LLC is a formal establishment of the company. Some customers may see the business as more legitimate because you have it registered as an LLC. This may also make it easier to qualify for business financing.
2: Division of assets
When you start your business as an LLC, a division between the company and your personal assets. This means that as long as there aren’t fraudulent circumstances, creditors can’t claim your personal assets if the business is sued or has claims made against it.
3: Taxation options
The taxes for an LLC can go through your personal income tax return. This prevents you from having to pay taxes on the business income and then again when you pay yourself. The pass-through taxation can save you money in the long run.
As a new business owner, you must ensure that you do what you can to protect your company. Having someone review the terms of the contracts and other facets of the business to ensure legal compliance is critical.