Entrepreneurs, Should You Form a Limited Liability Company (LLC)?

By Caressa Waechter

When you decide to start your own business, or become an entrepreneur, you need to be aware of the legal liability implications of doing so. There are potentially greater legal liabilities you are subjected to as a small business owner that you did not have to worry about before you owned a business.

Business taxes are another issue you need to consider when you are a small business owner. Since business taxes are handled much differently than your personal taxes, you need to have a handle on your business tax situation. Any thing related to your business taxes is best run by an accountant, so make sure you have one.

If you are an entrepreneur, you can be a sole proprietor, though this generally is not the best choice for most people. When you are a sole proprietor, you are missing out on much of the business tax benefits and personal liability protection that you might otherwise enjoy. Of course, discussing what is best for your situation is best done with a professional.

What business structure should the average small business owner use? First off, the smart entrepreneur will seek professional guidance in determining which structure will offer them the best personal liability protection and allow them to take best advantage of tax laws.

Probably one of the best business structures to choose as an entrepreneur is a Limited Liability Company, or LLC. With a properly set up Limited Liability Company, you get personal liability protection because you are separating your business and personal activities. Also, when you choose to form an LLC, you get to choose how you are to be taxed, which can have some tremendous advantages.

Forming an LLC is very easy, with one of the more expensive options being paying a lawyer to form your LLC. A much less expensive option is to use an online LLC formation service, which lets you get a properly set up LLC with prices starting at under $200.

Despite there being other options to choose when forming your business, an Limited Liability Company offers simple setup and operation and therefore proves to be a wise choice for the average business owner. An LLC is just a great all around choice that is easy to maintain, yet offer the personal liability protection business owners need.

Always talk with a professional to ensure LLC incorporation is the right structure for your small business. It is important to make sure that you have your business set up correctly to reduce personal liability and to take advantage of the tax benefits afforded to companies, and an LLC is a great way to accomplish this.

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