After embarking on their business venture, many business owners realise they would like to structure or incorporate their business for the benefits it provides. Many owners begin as sole proprietors, choose not to register their business at all. Depending on your business’s needs, you may want to consider forming an LLC.
An LLC is a limited liability company, or a type of legal entity that reduces the risk owners take on. An LLC protects business owners’ personal assets from the debts of the business. In addition, they allow for the business’s profits to be taxed with the owner’s personal income. This means that the profits are only taxed once, and avoid “double taxation”.
Not every business will be right for an LLC. You may find that you prefer the benefits of an S corporation, or the freedom to go public with a C corporation. Check out this infographic below to help you decide whether this approach to your business’s structure is right for you, and how they compare to other common business entities.
Meredith Wood, Editor-in-Chief, Fundera