Updated: November 22, 2018
There are many stages of starting your own business, and after you/ve come up with an idea, received some funding, and even gotten a few clients, you may be wondering what’s next.
Many business owners choose to structure their businesses according to their specific tax and liability needs. At this point, you may want to consider forming an LLC for your business
LLC stands for a limited liability company, and it is a kind of legal entity for businesses.
The LLC combines some of the benefits of sole proprietorships and corporations to work for small to mid-sized businesses.
LLCs protect the business owners from certain liabilities like business debts and lawsuits. Also, LLCs can be taxed as pass-through entities, allowing the profits of the business to be taxed with the owner’s personal income.
This means that the money made on the business is only taxed once, though at the higher rate of personal income tax.
You should fully consider all your options before selecting your business structure. You may find that you prefer the simplicity of sole proprietorships, or the ability to go public that C corporations allow.
If you’re looking to fund your business, it’s good to keep in mind LLC aren’t the most attractive structure to investors.
To help you decide if you need an LLC, and to understand how they compare to other business entities, check out this infographic that Fundera created: