If you’re a small business owner, you may have ready about limited liability companies, or LLCs, in the past. An LLC is a business structure that offers some protections that you won’t get as a sole proprietor. If you’re ready to expand your business or want to make sure your business is separate from your personal finances, an LLC may be a good choice.
There are three significant benefits to setting up an LLC rather than staying as a sole proprietorship. These include:
- Flexibility with your income taxes
- Personal protection against liability and lawsuits against your business
- The ease of setting up an LLC
Here is more about each of the benefits and why an LLC might be a good choice for you.
Flexibility with your income taxes
Finally, taxation changes with an LLC. The nice thing about an LLC’s taxes is how flexible they are. You can be taxed in the same way as before, like a sole proprietor, if you’d like, or you can be taxed as an S corporation or C corporation.
Personal protection against liability and lawsuits against your business
One of the main and best benefits of an LLC is that it provides you with individual protection against liability in the case that someone sues your business or comes after it for a past-due debt. With an LLC in place, your personal assets and holdings won’t be at risk.
The ease of setting up an LLC
Another thing that makes LLCs so great is that they’re easy to set up. You’ll need to file articles of incorporation with your state, and then you’re ready to go. You may also need to choose a business name and take care of other paperwork depending on what you do, too, though, so you may want to look into getting legal support before you file.
Since an LLC is simple to set up, offers liability protection and could give you more options for handling your taxes, it’s a good option for many small business owners. This is something to think about as you consider the business structure that may be right for you.
