As an aspiring business owner, you must decide what business formation you wish to go with before all else. Corporations have their benefits, but they do not suit every person’s goals or style of running a business.
Consider taking a look at limited liability companies, or LLCs for short. This common business structure may provide you with exactly what you are looking for.
Protecting your personal assets
Fit Small Business examines the potential drawbacks and benefits related to an LLC. Of course, the biggest selling point and benefit of an LLC are right in the name: limited liability. If you choose an LLC as your structure, then you protect your personal assets from the possibility of bankruptcy. If for some reason, you need to file for bankruptcy or pay off debts under your company’s name, you will not lose personal assets such as your home or car.
Pros and cons of LLCs
LLCs also prove attractive to many because it allows for member ownership. On top of that, it can even potentially lower your taxes due to pass-through taxation. However, you should not rely on this, as pass-through taxation does not always equate to lower taxes.
Typically speaking, LLCs have a less rigid and formal structure than corporations. This allows you more flexibility and movement. You often have less paperwork to deal with, and what you must contend with is often simple, unilateral and straightforward.
However, LLCs also tend to have high annual fees, limited investment options and inflexibility when it comes to membership turnover. Consider contacting legal aid if you wish to look further into this option.