As a business owner, you can run your business as a sole proprietorship, or it can be operated as a formal structure, for example, an LLC. Forming LLC as the business structure is an exceedingly good choice for the average entrepreneur. Managing your company as an LLC brings many benefits.
Following are just a few of many reasons to contemplate having an LLC, if you are a small business owner:
1. Protection of personal assets - As a business owner, you are more apt to be sued. You need to protect your personal assets from those of your company, so your personal monies are protected in case a lawsuit is brought against your company. By starting LLC that is correctly set up, you are usually protected.
2. Have a professional image - Nothing says a professional company like a legitimate business structure. Just about anybody can start a company, but it is the people that go the extra distance by setting up a business structure show how serious they are about their company, and people take notice of this.
3. Trust - If your business is an LLC, you are making it particularly easy to discover suppliers in which to do business with you, and particularly easy to get a business loan. Operating your business as a profession, and not a hobby, is a wonderful way to gain trust with those companies that you need to work with.
4. Low audit risk - Sole proprietorships are more at risk to facing an IRS audit than LLCs. This most likely has something to do with the fact that a person might be using the business as an excuse to get some tax benefits, though they would get more if they actually had an LLC and the IRS is onto these people. However, if a person has taken the effort of LLC formation, it is likely they are in business for all of the right reasons.
5. Business flexibility - When operating as an LLC, you have greater choices in how to handle operating your business. Adding additional owners is a simple process, which is not possible as a sole proprietor. A limited liability company is a very flexible business structure that gives a variety of options on how you wish to manage your company.
If you are going to run a business, then you should do what you can to run it as effectively as possible. Making use of an LLC as your business structure has many virtues, even more than those listed in this article. Treat your business right and make it an LLC.