Posts Tagged ‘mycorporation.com’
Setting Up Your Business as an LLC
Thursday, February 7th, 2008
There are several different ways you can legally structure your business operation. You may have heard of some or all of these different types of structures - Partnership, Sole Proprietorship, Incorporation, or Limited Liability Company (LLC).
A sole proprietorship is just that - you the business owner with your business license. A partnership is basically two sole proprietors who are partners and have a written agreement of their partnership. Incorporating is expensive and complicated and can be very inflexible for the small business owner. An LLC is a perfect solution for the small business with the benefits sole proprietorship and incorporation.
What Is An LLC?
A limited liability company or LLC is an attractive business structure, as it offers the benefits of a partnership or S corporation while providing personal liability protection of a corporation. While there is quite a bit of paperwork involved in establishing an LLC, you can build in a great deal of flexibility to meet your business requirements.
The LLC is a relatively new type of business and it has tremendous advantages, particularly for small businesses that aren’t in need of directors and stockholders and all of that overhead. With an LLC you put together an operating plan, make sure you file updates once or twice a year (depending upon the rules of the state you file in), and make sure to file your taxes.
Why Should I Choose an LLC?
The most important benefit gained from an LLC is that you have protection of your personal assets from your business assets. What this means is that if you are selling something to someone and they decide to sue you, they only can sue the LLC, and your home and personal assets are protected.
For tax purposes, income comes through the LLC and then is passed straight to you, or however you and your business partners have it set up in your operating plan. There is no complicated tax strategy or continual filing. In fact, many LLCs do their own books and taxes using simple accounting software.
What Type of Business is Best Suited for an LLC?
If you have a small business, the chances are an LLC would make sense for your business. If you are in the business of selling or reselling anything online, even an online auction business, you need to get an LLC set up ASAP if you do not have one already. The money you pay to set up an LLC will be by far the cheapest insurance policy you have ever owned.
Can I Outgrow an LLC?
As your business grows and takes on employees, it may make sense for you to convert your LLC into a Corporation and perhaps a Split S corporation, which is similar to an LLC but more structured. Employees, multiple locations, and increasing revenues can be reasons to consider converting your growing enterprise, but make sure to consult your financial and legal advisors prior to undertaking this conversion.
In addition, consult with your attorney and accountant prior to establishing an LLC. They can advise you on the best state to set up your LLC in as well as give you ideas on your operating plan and how it can be of the most benefit to your company.
Sites to help you with incorporating include: www.bizfilings.com, www.corporate.com, and www.mycorporation.com
Tags: advice, bizfilings.com, corporate.com, larry Slusser, Limited Liability Company, LLC, mycorporation.com, Starting a Business
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