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The Two Most Important Reasons to Form an LLC

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Starting a new business? If you are, you don’t want to wait very long before you register your business with your secretary of state. There are numerous advantages to forming an LLC but there are two that you must know:

Shelter

Most of us are eternal optimists. We decide that we’re going to start a new business and we think of the many great things that will happen. The confidence we’ll gain from owning our business, eventually helping to put America to work by hiring employees, all of the new locations we’ll open, and of course all of the money we’ll make.

What we don’t think about is the lawsuit that could come from somebody slipping on our stairs, the food poisoning, or the business not quite getting off the ground the way we wanted and because of that, the mountains of debt that mount. Hopefully the bad fortune won’t come your way but what if it does? Do you want your family’s finances to be adversely affected by a lawsuit that is filed? Remember that if you don’t form an LLC, those lawsuits aren’t filed against your company. They’re filed against you and your family!

An LLC shelters your family from the misfortune relating to your company.

Pass Through

Here’s how your taxes are going to work with your new company. Let’s say that you sell gourmet cookies out of your home. Your cookies are so good that you begin sending them all over the country and because of that, you consider registering your business as a corporation and having your business pay you a wage. If you qualify, forming an LLC allows you to “pass through” your assets. This means that you have a company but you aren’t paying corporate taxes and then paying yourself and later paying personal taxes on your earnings.

Forming an LLC allows you to pay taxes only once which often means a tax savings. Of course we have to include the normal disclaimer: you’re a unique business owner and your tax situation is exclusive to you. Using an online business registration service can help you decide which type of business designation is right for you.

Bottom Line

Especially if you have a family who relies on you for financial stability, it would be a large mistake not to register your business and receive the protection that an LLC gives you. This is easy to do when you get the help of a business registration service.