Many entrepreneurs initially start their business as a single owner rather than a limited liability company (LLC). Why choose this entity? By forming sole ownership, entrepreneurs have full control over their business. It’s also affordable to set up and get started with a little paperwork.
However, the drawback is that a single owner does not provide liability protection to the owner. The owner is solely responsible for any unforeseen circumstances such as proceedings that affect the business.
It can be incorporated as a company, partnership, or LLC, depending on the business and its offerings. The most popular entity in the above trio is generally best LLC services, so let’s see why this formation is ideal for any business.
- Limited liability company provides business owners with liability protection
Once you have formed an LLC, specify your business as another legal entity. This separation creates limited liability protection. Your assets are separated and protected from business-related assets.
- Select the LLC taxation method
The only owner pays taxes on everything. This is because your business is not considered an independent entity. However, the limited liability company can be taxed as a single asset or choose another entity to tax.
- Limited liability company is a flexible entity
Unlike companies that tend to be more structured, LLCs have less corporate regulation. For example, LLC is not required to hold a general meeting of shareholders or establish a board of directors.
- There are other LLC structures to incorporate
Is the LLC associated with multiple owners or members? Therefore, you can consider incorporating it into one of the following three structures:
Single Member LLC-This entity is ideal if you have only one member (owner) to run your business.
Member Management LLC: Member Management LLC treats all members equally. Each member shares the same amount of obligations and responsibilities as the other members. Manager Managed LLC-This entity is a good option for members who are concerned about not being able to manage LLC properly.