When you form an LLC for your business, you get 5 major benefits automatically. Learn about these benefits so you can make sure you use them to make your business protection proof and more successful. best LLC services
The first and most well known benefit you get once you form an LLC is protection for you personally from business liability and obligations. One of the biggest obstacles to starting a business is the added risk. The LLC specifically addresses the personal risk you take with a sole proprietorship.
However, this liability protection is not absolute and sometimes requires further action. Learn about the limitations and what steps you need to take after formation to preserve the protection after you form an LLC.
The second benefit of an LLC is a more professional image. Statistics show that customers view a limited liability entity as a more serious and professional business. Just the mere fact that the business owners chose to form an LLC as the official business vehicle to run and operate their business separates the business from the many less serious business owners out there. It shows intelligent planning and this helps with a more professional image.
The third benefit is similar to the second but makes a big difference. An LLC business exudes more trust and security than an un-incorporated business such as a sole proprietorship. If your business is viewed as more trustworthy, you will get more customers and more business!
In today’s society where there are so many fly by night businesses and even more scam businesses out there, if you show to the public that your business has been legally organized as an LLC, you will stand out.
The fourth benefit is operational flexibility. Unlike a sole proprietorship or a corporation, the LLC laws allow the members of the limited liability company to determine the best set of operational and governance rules applicable to their business.
This is a great benefit because after you form an LLC, you can tailor how your LLC can most effectively be run and who has the authority.
The fifth benefit is a lower risk of tax audit. Sole proprietor businesses have a much higher likelihood of audit compared with a limited liability company. The Internal Revenue Service knows how easy it is to claim you have started a business and start trying to take unlawful deductions to lower your taxes. With a sole proprietorship, there is no state filing required- you can just call yourself a business.
However, when you form an LLC for your business, you are taking a significant and serious step for your new business. You are undertaking a filing with a state agency and a commitment to maintain and operate a legal vehicle for your business. This one step goes a long way when the IRS is deciding where to focus its audits on.
While I have outlined 5 benefits of an LLC, the limited liability company has many benefits to a business owner. It costs so little to form an LLC and maintaining a limited liability company after formation is simple once you know the rules.