There are several business structures that you can use to operate a business as. You can be a sole proprietor, or you can choose another business structure such as an LLC. An LLC is an excellent choice when it comes to a small business structure, as it offers many advantages over being a sole proprietor.
Below are 5 reasons why, as a business owner, you should consider forming an LLC:
1. Personal liability protection - As a business owner, you may be a large target for a lawsuit. You need to shield yourself personally from your business, so your personal assets are protected in case a lawsuit is brought against your business. A properly setup LLC offers this protection.
2. Profession image - Nothing says professional company like an actual business structure. Anybody can call themselves a business, but only those that take the extra step of setting up a business structure are truly serious about their company, and customers take notice of this.
3. Trust - If you are an LLC, then it is a lot easier to find vendors to do business with you, and a lot easier to get a bank to lend you money. Operating your business like a business, and not a hobby, is a great way to gain trust with those companies that you need to do business with.
4. Low audit risk - Sole proprietors are more at risk to be audited by the IRS than LLCs. This most likely has something to do with the fact that someone might by saying they are a business to just get some tax benefits (which are actually greater as an LLC) and the IRS knows this. However, if someone goes to the trouble of forming an LLC, then they are most likely in business for all of the right reasons.
5. Adaptability - When you have an LLC, you have a very adaptable business structure. If you wish to take on investors, you can easily add new owners to your business. An LLC offers other flexibility that you will not find as a sole proprietor.
The LLC business structure offers many advantages over other structures, especially the sole proprietorship. The above 5 reasons just scratch the surface as to the reasons why you should really consider operating your business as an LLC.
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