One of the most important decisions you’ll have to make when starting a new business is also one of the first: choosing a legal form for your company. The structure you choose can have a major impact on the success of your enterprise, potentially reducing your tax bill and shielding you from personal liability for the business’s debts. You might decide to operate as a sole proprietor, from a full corporation, or considering setting up an LLC.
3 Advantages of Setting Up an LLC
1. Tax Savings
LLCs provide some of the benefits of a sole proprietorship with the protections of a corporation, especially when it comes to taxes. While setting up an LLC means forming a completely separate legal entity, the profits are considered the personal income of the partners, which is generally taxed at lower rates than business revenue.
2. Protection From Personal Liability
One of the most important features of an LLC is the liability limitations, which ensure you won’t be held responsible for your business’s financial obligations unless you personally guaranteed them. You also can’t be held liable for the consequences of wrongdoing by either your partners or employees.
3. Ease of Maintenance
Most states require corporations, especially nonprofits, to submit records of board meetings along with regular financial data. LLCs are relatively easy to maintain, especially for small businesses with only a few partners or employees. In general, LLC owners only have to pay their state taxes and file an annual renewal notice with the appropriate state agency to remain in good standing.
For over a quarter century, We The People of NY’s specialists have been bringing justice to the everyone with fast, affordable legal document preparation and expert advice. If you’re thinking of setting up an LLC, visit their website or storefront on W. 14th St. to get started, or call (212) 633-2200 with any questions.