With an increasing number of people going into business for themselves, you may have decided to become one of the self-employed and finally launch that business you have been dreaming of. If so, the first thing you need to think about is how you plan to register that business. Many small business owners find themselves trying to decide between C-corporation or LLC formation for their new business. Here's a look at a few reasons why an LLC is likely your best option.
Minimizes Tax Expenses
When you register a business as a C-corporation, the business becomes its own entity for tax purposes. You'll pay taxes on revenue from the business as well as taxes on your own personal income from the business. This can be costly over time.
Registering your business as an LLC helps you to avoid paying taxes on the business income twice. Instead, the LLC will be rolled up under your personal taxes through a schedule C, and you will only be taxed once on that revenue.
Protects Your Investments
One of the biggest threats for small business owners is finding yourself personally sued for something that happened as a result of your business operations. Unfortunately, you may find that you are forced to sell personal assets to settle a lawsuit when this happens.
Opting to register as an LLC, however, can protect your investments and your assets. When you register your business as an LLC, it limits your personal liability when it comes to legal issues. Lawsuits are restricted to the value of the business and assets specifically owned under the business. Your personal assets and investments cannot be touched.
Easy To Manage
Registering a C-corporation means that you have to follow a specific set of by-laws, adhere to certain corporate standards, and create a board of directors. Changes to the business structure, investment, and contributors must be approved by the board before they can happen.
An LLC, on the other hand, is a straightforward registration. You retain control of your business and can easily make changes when needed. You don't have to have the approvals, and it requires far less paperwork than you would have to file with a C-corporation.
Making the decision to register your own business is a big change. You want to be sure that you're doing it right. With this information, you can see why an LLC is a great choice. LLC formation services can help you with the paperwork if you're not sure where to start.
There are a lot of things you can do to turn a profit, but none are so rewarding as starting your own business. When you start a business, you can successfully break ground on a new hobby, help a team of people, and do what you can to reach out to others in a positive and uplifting way. I began thinking more seriuosly about business when one of my brothers got into it, and it was really interesting to see how well he did. Although I am not a business owner, I believe you can create a great company if you try hard. Check out these posts to learn why.