When you decide to start your own business, or become an entrepreneur, you need to be aware of the legal liability implications of doing so. There are potentially greater legal liabilities you are subjected to as a small business owner that you did not have to worry about before you owned a business.
Business taxes are another issue you need to consider when you are a small business owner. Since business taxes are handled much differently than your personal taxes, you need to have a handle on your business tax situation. Any thing related to your business taxes is best run by an accountant, so make sure you have one.
Sole proprietorship is always one way you can run your business, but it usually is not the best option for most people. You do not get any of the business tax benefits, or personal liability protection when you are a sole proprietor. Discussing what is best for your situation is a great subject to discuss with a professional.
What business structure should the average small business owner use? First off, the smart entrepreneur will seek professional guidance in determining which structure will offer them the best personal liability protection and allow them to take best advantage of tax laws.
A very common business entity, and most likely the best choice for most small business owners, is an LLC. A limited liability company (LLC) gives you personal liability protection, assuming it is set up correctly, and you totally separate your business and personal activities. Also with an LLC, you can choose how you should be taxed.
Forming an LLC is very easy, with one of the more expensive options being paying a lawyer to form your LLC. A much less expensive option is to use an online LLC formation service, which lets you get a properly set up LLC with prices starting at under $ 200.
While there are other business structures you could use for your business, an LLC is one of the simplest and works well for most entrepreneurs. An LLC strikes the right balance between ease of use and personal liability protections, so it is generally a great choice.
Always talk with a professional to ensure LLC incorporation is the right structure for your small business. It is important to make sure that you have your business set up correctly to reduce personal liability and to take advantage of the tax benefits afforded to companies, and an LLC is a great way to accomplish this.
