Starting an LLC – 5 Reasons it is a Good Idea
Posted on March 31, 2009
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As a business owner, you can run your company as a sole proprietor, or you can run a formal structure, such as a limited liability company, or LLC. Form a LLC as your business structure is an excellent choice for most businesses. There are quite a few benefits to operating your operation as an LLC.
Following are 5 benefits you see when you think about having an LLC, as an entrepreneur:
1. Protection of personal assets – If you own a business, you may be a large target for a lawsuit. You need to protect your personal assets from those of your company, so your personal monies are safe in case a lawsuit is filed against your business. Protection is usually offered by starting an LLC that is correctly setup.
2. Have a professional image – Nothing says professional company like a legitimate business structure. Just about anybody can call themselves a business, but only the people that go the extra distance by setting up a business structure are truly serious about the success of their company, and people see this.
3. Trust – If you are an LLC, you are making it very simple to find vendors to deal with, and a lot easier to get a bank to lend you money. Running your company as a profession, and not a side venture, is a wonderful way to be trusted by those other businesses that you need to work with.
4. Less chance of being audited – Sole proprietors are at greater risk to be audited by the IRS than LLCs are. This most likely is due to the fact that someone might be using the business as an excuse to just get some benefits on their taxes (which are actually greater as an LLC) and the IRS knows this. The thought is that if someone has taken the trouble of form an LLC, then they are most likely in business for genuine purposes.
5. Business flexibility – When operating as an LLC, there are more options in how to handle operating your operation. You can also bring on more owners very easily, which you cannot do as a sole proprietor. A limited liability company is a very flexible structure for business which gives you multiple options on how you wish to run your business.
If you are going to run a business, then you should do what you can to run it as affectively as is possible. Using a limited liability company as your business structure has several strong points, even more than those appearing above. Take your company seriously and consider forming an LLC.
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