Many small-business owners have heard that they should operate their business as an LLC (limited liability company). But is that true for you? Three major factors you should consider in choosing a type of business entity are liability protection, taxation, and convenience. For many businesses, an LLC is the best choice.
The LLC—A Flexible Option
Liability protection, taxation, convenience—on each of these three major factors, the LLC is an attractive entity for the small business.
The owners of an LLC are generally not personally liable for the business’s debts. If the business gets sued, or can’t pay its bills, then you as an owner don’t need to worry about having to pay out of your personal assets.
When it comes to federal taxes, LLCs have options. You can choose to have the business profits pass through and be taxed on your personal tax return (like a sole proprietorship or partnership), or you can even choose to be taxed as an S-corporation, which could save you big money on taxes each year.
The convenient thing about LLCs is that you can structure the ownership in almost any way you want. How much authority each owner has, what share of profits each owner gets, how to vote on major decisions—these issues and more can be decided by the owners. Also, the paperwork you file with your state to create and maintain an LLC is usually minimal.
Before you choose any type of business entity for your next business, make an appointment with Jill Gregory to help you choose the right entity for your overall life and business reality. And ask about our full spectrum of legal services for businesses, including our LIFT Start-Up Session, which includes employment structuring, financial advice, and tax systems you need for your business.