5 Reasons Why It Is a Good Business Idea to Form Your LLC
Having your own business can be one of the most difficult and challenging things that you will ever be involved in during your life. However it can also be quite rewarding and exciting to have your own destiny in your hands. Unfortunately, quite a number of individuals who operate various businesses overlook the fact that it is absolutely essential to incorporate your business in order to take advantage of the many protections that the law provides businesses that are incorporated properly. Here is just a brief overview of the 5 reasons why it is a good idea to form a LLC.
1. By forming a LLC you will be able to protect your personal assets from creditors and lawsuits. Essentially, say you have a business that sells pottery to consumers in your city. You never really considered incorporating and just proceeded to operate as a sole proprietor up until now. One day an individual is walking through you store and slips and falls on the ground. That person could very likely sue you in court for negligence and recover a great deal of money. Should you business not be able to cover the amount that is awarded to the plaintiff then he or she will be able to go after your personal assets in order to recover the difference. By incorporating you will avoid personal liability and only what you have in the business is subject to lawsuits or creditors.
2.Ability to take advantage of tax planning strategies whereby you can utilize tax deductions available to LLC’s.
3. Opportunity to get loans as having a LLC gives the banks a more professional and stable image than a regular unincorporated sole proprietorship.
4. An LLC has less stringent corporate requirements as compared to a regular corporation. Regular corporations typically have to have board of director meetings, meeting minutes, etc…. while an LLC is typically not required to have these. Thus there is a significantly less requirement for paperwork.
5. There is a great deal of flexibility in management structure as members or non-members can both be managers of the entity.
This is just some of the major reasons why you should incorporate your company. There does exist many more reasons however the overall idea is that there is a great deal of benefits when you incorporate. The important thing is that the incorporation is done by a professional to ensure that you get all these benefits and protections available to you.