Starting a business is a major undertaking. One of the most important things you can do when you decide to open a company is to plan carefully to enhance the chance of success. Ideally, this process will start well in advance of the company opening so the decisions and plan don’t have to be made in a rush.
As you’re creating the plan for your business, you’ll need to decide on the structure. One option is the limited liability company (LLC), which is often chosen for its ease of setup and maintenance, as well as the valuable projection it provides.
Division of personal and business assets
An LLC offers a distinct division between the assets that belong to the business and those of the owner. This can help to protect the owner’s assets from being seized by creditors or through lawsuits against the business. Even if the business has to file for bankruptcy, the division remains so owners will be able to continue to use their personal assets to live on.
Pass through tax structure
An LLC isn’t taxed separately as a business. Instead, the income tax is passed to the owner or owners. This is known as pass-through taxation and has a cap of 37%. Certain LLCs may qualify for a reduction through 2025.
There are many different facets to think about when you’re establishing your business. Taking the time to get it all together is critical. Working with an individual who’s familiar with forming a new business may be beneficial so you can have a good foundation for your company.
