Some people run their own company but consider themselves a contractor for a variety of different clients. However, even if you just work for yourself, it is wise to form an LLC. An LLC can protect a person acting as a company from debts or judgments held against the company. Many people do not know the benefits of getting a LLC form filled out. The following are just some of the reasons that getting an LLC should be one of your highest priorities.
Protecting Your Personal Finances
If you are a sole proprietor, then this might not work as well for you. Protecting personal assets from being seized to pay business debts is important if you are the owner of the companyand the company cannot pay the debt. This is also good if lawsuits are filed against your company. As the owner, you will likely suffer financially due to general profit loss, but this keeps the filer of the suit from being able to personally go after you. Losing your home or car because of a business mishap can impact a family immensely so protecting yourself is important.
LLC Sounds Official
“Fake it until you make it” is a common mantra among people just starting a job or those who have just started a company. If a company isn’t incorporated or an LLC, then they lose a bit of legitimacy as these designations mark their brand as an official company.
If someone else tries to steal your company name, your company is more protected when the company is a LLC. Otherwise you would probably have to rebrand. Having to rebrand after building a reputation can cause major profit loss as branding is important in many industries.
LLC Means Longevity
In sole proprietorships and partnerships, when someone retires or dies, these businesses end. With an LLC,the company still exists even after an owner or manager retires or moves on. This can show potential clients that the company is in business for the long haul which can add value to your brand. Also having an LLC definitely helps a business stand apart from those that are just work-from-home gigs or being a contractor for another company.
Tax Reasons
Self-employment taxes are a nightmare for many and they are extremely high. Forming an LLC can help protect the business owner even if they just work for themselves from being taxed by the self-employment taxes. This gives the owner flexibility with what they would want to write off as business expenses as well.
If you want flexibility instead of being governed by legal technicalities or other hassles, choose an LLC over a corporation label. Corporations have to show annual reports, have shareholder meetings, and other things that make the LLC a much easier and more flexible option.
It Is Extremely Easy
Many people think that setting up an LLC is going to take a lot of paperwork and confusing language. This couldn’t be further from the truth and much like TurboTax took the tax scene by storm, there are places online that make forming an LLC extremely easy. These websites guide you through LLC setup questions and the rest of the process. It is relatively inexpensive as well and this is a one-time fee to protect yourself from any business related problems impacting personal finances of the owner.
People Try to Sue Businesses Often
If you have a business that is open to the public, then forming an LLC is imperative. The LLC can help the business owner protect themselves personally from a slip-and-fall lawsuit. Of course, a business should have insurance as well to protect a business from slip-and-fall lawsuits.
It is also possible that you or someone who works for you could make a mistake leading to a lawsuit. A lawsuitwill not help the business financially but at least it cannot make a huge impact of the owner losing a home or a mode of transportation.
Having an LLC is all about protecting yourself as a business owner or primary manager. Things that go wrong in the workplace that may or may not be your fault should not impact you negatively in a financial sense.