So you’re starting a business or making an investment. You’ve got that great idea, and you want to make sure that you do everything perfectly out of the gate. Well, the first step will almost certainly be forming a limited liability company (LLC). “But why should I bother with an LLC?” you might ask. Well, SIMPLY PUT, an LLC will protect you from the very serious risk of personal legal liability that could arise when you run your business.

Why choose an LLC?

Going into business without using any separate legal entity (otherwise known as being a “sole proprietor”) means that any debts or liabilities you incur as a result of your business activities, including a judgment against your venture in a litigation, would be collectible against your personal assets. And if you’re married, that often extends to the marital assets as well.

The main entity choices for your business venture are LLCs and corporations. Of these, LLCs are the most common for startups and small-to-medium sized businesses for a few reasons:

1. LLCs are easier to set up than corporations (less paperwork).

2. LLCs are cheaper to set up and administer because there are fewer required governing documents and government approvals.

3. LLCs, in most instances, are only taxed once – as pass-through income to their respective members. Corporate dollars, on the other hand, are, in most instances, taxed twice: once at the corporate level, and then again upon being remitted as distributions or dividends to shareholders.

All things considered, we recommend LLCs for their simplicity and flexibility. But, each situation should be carefully examined on its own merits to determine the best course of action. Other important questions still must be addressed, such as: where to set up the entity, and how to take advantage of multiple entities in best structuring your investments.

Over the next few weeks, we will be diving a bit deeper into some of the specific important topics around LLCs. We hope you’ll follow along and reach out if you have any questions or needs!