Ask Success Financial LLC: Does Your Business Need LLC Formation?
Forming an LLC is a fantastic option for sole proprietors (independent contractors) and small partnerships. Many small businesses are missing out on many benefits because they are unaware of the benefits an LLC offers.
LLCs are not for everyone, but it’s important to know all of your options as a business owner. There’s a strong possibility that you could be paying too much in taxes or exposing yourself to unnecessary risks.
Success Financial LLC is a team of professional consultants who excel in helping small businesses break new ground, increase sales, and grow. They were named a Top Digital Business Consulting Provider in 2021.
And just recently, Success Financial LLC has launched scholarship programs for veterans and is overall one of the best, most accessible consultants for small businesses. We asked Success Financial LLC for tips on forming an LLC and when it should be considered for small businesses.
Size of your Business
The size of your business should be a significant factor in deciding whether you take the leap to an LLC or not. If your business is small, with one person or a small team of people, and if you do a lot of business, these are just a few of the things to consider.
It may be an excellent idea to form a small LLC simply for tax benefits and personal protection. If you are not doing a lot of business, you may want to wait until your business, team, and profits grow before taking the leap.
Ease of Creation
It is straightforward to create an LLC in most cases. The exact requirements depend on your state, but most will need a business name, a registered agent, a fee, and the filling out of a specific document.
Some states even require that you set up a notice of intent, which will require contacting the local newspaper and having an article written about your LLC intentions. It may seem like many steps, but it is a relatively straightforward process once you start.
Personal Asset Protection
LLC stands for limited liability company. Limited liability is the main benefit of an LLC. This means that only your business’s assets are at risk during lawsuits and other legal claims. Without an LLC, your assets could be at risk if anything unfortunate were to happen.
Corporations have this protection, but they have more hoops to jump through. An LLC gives your company the corporation’s security without many headaches and requirements.
For a typical C corporation, business owners are exposed to double taxation. Their company is taxed, and then the owner’s income is taxed. An LLC allows owners only to pay those taxes once.
The business’s profits will count towards the owner’s income and therefore be subjected only to income tax. So, you get the protection of a corporation (limited liability) with the tax benefits of an individual. This is the strength of an LLC.
Psychology plays a significant role in driving sales in customers’ minds. Having LLC behind your name is a great way to boost your legitimacy in customers’ eyes.
It shows that you have committed the time and resources necessary to create an LLC and that you are a serious business, not just a hobbyist. This may also help with future investors or partners.