If you are starting up a new business, you probably realize that you have a number of options as far as how to organize the company. We’re going to take a closer look at an LLC, and why it may be a good option for your enterprise.
What Is an LLC?
LLC stands for limited liability company. This is a legal structure for a business that allows owners to serve as members. It can help to protect the personal assets of a sole proprietor, but it allows for the flexibility of multiple members. There are also certain tax advantages. Rather than turning owners into shareholders, an LLC is more of a way to pass a profit or loss through a business entity before it reaches the members (owners).
What Are the Advantages of Forming an LLC?
Even if you haven’t started a new business, you may want to consider changing your sole proprietorship to an LLC. Here are 2 big reasons why:
- Personal Liability Protection – Separating company and personal assets can help protect your personal property, such as a home or car, from business creditors.
- Tax Benefits – Money is filtered through the business to members. Therefore, your personal taxes are simplified because you either have a profit or loss, while the business has to deal with the income and expenses. Profit distributions may manage to move you into a lower tax bracket.
How to Form an LLC
Each state has its own regulations on how to form an LLC. This involves selecting a business name and filling out various forms. While you may be able to follow a step-by-step guide you find online, you should always consult with a business attorney before filing to ensure all of the paperwork has been handled correctly. This is especially so when the LLC will have more than one member.
If you are interested in forming an LLC, contact Poklala Law today. We offer affordable business formation advice and assistance to small business owners like yourself. Call 1-844-695-1487 to get started today.