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Benefits of establishing your business as an LLC

On Behalf of | May 15, 2024 | BUSINESS & COMMERCIAL LAW - Business & Commercial Law

Starting a business is a major undertaking that must be handled properly. One of the most important things you have to decide is what type of business structure you want to use. One of these options is a limited liability company (LLC). This is an option for companies with one owner, but it can also be used for those with multiple owners.

There are several benefits that you should consider if you’re thinking about setting up your company as an LLC. Understanding these can help you to determine if this is the best business structure for your upcoming business.

Division between business and personal assets

One of the most beneficial aspects of an LLC is the division it provides between personal and business assets. This is beneficial for you because if the business has debts or is sued, your personal assets are safe from those matters. With the company established as an LLC, only the business’ assets can be claimed by creditors or lawsuits.

Pass through taxation

An LLC doesn’t pay income taxes directly on its own tax return. Instead, the members, or owners, of the LLC pay taxes as part of their personal income tax returns. This prevents double taxation since profits aren’t taxed through the business and again on the personal return.

Even after you determine what business structure is best for your business, you still need to take steps to protect it. One way to do this is to ensure you have legally binding contracts and other documents for your company. Working with someone familiar with these is critical.