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What's an LLC and Why is it Beneficial?

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When you start a business, you know that there are 1001 things to think and do. Some of the things are potentially the ones that are at the bottom of your business startup checklist. I can not blame you – some things are just not fun to do; There are tons of things like promoting your product and serving customers that have a direct impact on your business results.

One of the most important things, things to do absolutely (but totally boring) that are integral to the management and growth of your business is setting up the legal structure of your business . You will have to choose the type of business or company you will pursue. Your decision will determine the direction of your business in the future, as well as its growth.

Many new business owners choose to register their companies as an LLC because of a variety of benefits that are appreciated by this company structure. Here's more about the nature and benefits of an LLC:

What is an LLC?

There are four principal US business entities, including sole proprietorships, corporations, limited partnerships and limited liability companies, or limited liability companies.

By definition, LLC is a business structure that combines the direct taxation of a partnership or a sole proprietorship with the limited liability of a corporation. Like corporations, LLCs are protected against personal liability. For example, if your company loses a lawsuit, the plaintiff can not sue your personal property for compensation.

Because LLCs benefit from a variety of benefits, they have become a popular business entity with contractors. So, what exactly are the benefits of an LLC?

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Benefits of an LLC

LLC is allegedly more popular than other types for some obvious reasons, namely:

1. Avoid Double Taxation

An LLC prevents the double taxation problem that a C-Corp structure has. It is taxed more like a sole proprietorship. This is particularly useful for startups.

2. Choose your location

Unlike a sole proprietorship, an LLC allows you to choose your head office. You can choose a location near your home or choose the one that offers the most benefit to your business. For example, Wyoming offers attractive tax incentives and business laws that work for small businesses.

3. Make changes easily

Especially at the very beginning of your business life, changes are often inevitable. Bringing new partners, for example, is a complex business in a C-Corp, but a simple process for an LLC.

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How to start an LLC

So, how to start an LLC, exactly? To begin, you will need to register your business with your national and federal government.

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At the state level, you will need to file individually for each state in which your business will do business. At the federal level, you will need to submit organizational articles and an LLC operating agreement as well as obtain a new tax identification number for your LLC.

It was a trivial task that did not concern all business people. Fortunately, thanks to modern technology, you can accomplish most of your documents online quickly and efficiently. For example, when you apply online for a tax identification number, you may receive the new number in about a day.

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There are many advantages to starting an LLC. However, you should consult your mentors and trusted lawyers to make sure you make the right decision because there is no single approach to establishing the structure of your business.