If you’re about the embark upon an exciting business venture of your own, you will probably be facing some pretty important questions. Chief among these will be the question of what form your business should take. Among all of the ways that you can register your business, the most popular option is to form a limited liability company or LLC.
As of 2021, there are millions of LLCs in America, with business owners and entrepreneurs of all shapes and sizes opting to fly their dream business under the LLC banner. If you want to know the benefits of an LLC and why you should create one, you have come to the right place. Read on to find out what is an LLC and why you should consider this option for your business.
1. Limit Your Liability
As the name suggests, one of the main LLC benefits is that they limit your liability as the owner of that business. If your business was formed as a sole proprietorship, your business debts and assets would be your own.
You would be personally liable if things went sour. Starting an LLC means that the company is completely distinct from you. Your own assets, such as your house or car, cannot be pursued as a means of collecting on business debts. This is why LLCs are the best types of businesses for small business owners.
2. Simple and Straightforward
You might be worried that starting a business as an LLC and running it will be complex. However, this is simply not the case. As the business entrepreneur experts at digitalassetguy.com explain, you can set up an American LLC online and send off your paperwork in just a few hours.
Furthermore, LLC owners do not need to meet the requirements that others types of businesses must do. You do not need to hold annual shareholder meetings or submit complex annual reports to the state. You can simply focus on growing your business.
3. Tax Benefits of an LLC
One of the most compelling LLC benefits is that there are lucrative tax incentives for small business owners. LLC’s offer a so-called “pass-through” taxation model. With this, you do not need to corporate taxes on top of personal taxes.
Rather, all LLC profits can pass directly to your personal tax profile and you can directly pay taxes on pure profit. With other company models, you often face double taxation as you must be taxed on both a corporate and an individual level.
4. Flexible Ownership
For many reasons, legal questions of ownership are the most important issues that any successful business must be able to settle. Oftentimes, the flexibility of ownership is crucial for growth.
For other types of businesses, such as S Corporations, there are strict limits on ownership, with the number of shareholders capped at 100 and a strict stipulation that corporations cannot be shareholders. With LLC’s there are no restrictions on the number of owners or types of owners are business can have.
More Essential Hacks for Better Business
Understanding the benefits of an LLC can help you make more informed business decisions. For more essential hacks for better business in 2021, we have got you covered. Make sure to consult our expertly-curated business guides today.