Are you starting a new business in Pensacola?
While there’s a lot of decisions that come with starting a new business, one of the biggest things you need to think about is whether you want to turn it into an LLC.
LLC stands for limited liability company, and many entrepreneurs choose this path instead of a sole proprietorship. While sole proprietorship gives you total control over your business, it doesn’t provide you with liability protection.
So, what’s so great about starting an LLC?
Avoid Double Taxation
One of the biggest benefits of forming an LLC is that it allows you to avoid double taxation.
Double taxation typically occurs when an entrepreneur opts for a C-Corp business structure. With this, both the company and the owner of the business are separately taxed in April.
By forming an LLC, this won’t happen, as you’ll instead be taxed like a sole proprietorship. If you want to, you can always convert your LLC to a corporation later on.
Perhaps the biggest financial benefit of forming an LLC is right in the name itself- limited liability company.
When you form an LLC, you’re saying that your business is a separate, legal entity. By making this separation, you create limited liability protection. This means that your personal assets are protected and separated from your business assets.
So, if someone sues your company, your personal belongings aren’t at risk with an LLC. If you don’t form an LLC, and instead opt for a sole proprietorship, both your personal assets and business assets could be at risk.
Registration is Easy and Affordable
Another major benefit of setting up an LLC is that registration is both easy and affordable.
In fact, the national average cost to register as an LLC is just $50 to $100. It may even be less depending on where you decide to form it.
If you’re on a tight budget, these savings can be especially helpful. To find out the exact costs and application requirements are, you can check with your local Secretary of State.
Another great thing about forming an LLC is that you can typically do it without the help of an attorney. Hiring an attorney can cost a lot of money, so this is another big incentive.
Another reason most entrepreneurs prefer LLCs over other entities is because they offer a lot of flexibility.
Once your LLC has been set up, there isn’t a lot of continual maintenance that you need to worry about. You can even sell interest in your entity, or add new partners along the way.
This makes it a much more relaxed alternative to a C-Corp, as with this entity, you’ll have to set aside time to make board decisions.
Are You Ready to Start an LLC?
Now that you know about the benefits of starting an LLC, it’s time to begin your journey.
Of course, starting an LLC will likely require that you make some changes in your bookkeeping. If you’re thinking about hiring a bookkeeper, contact us today.