You’ve been dreaming about launching your own business for years. Now, you finally have a plan to make it happen. Yet before you begin operating your business, you’ll have to make several important decisions. One of those is what type of business you will operate: a sole proprietorship, a general partnership or an LLC (limited liability corporation).
Even if you will be operating a one-person business, perhaps working as a tech consultant or freelance web developer, forming an LLC has many advantages. Some of these include the following:
- An LLC operates as its own legal entity. So, if your business is sued, you won’t personally be liable. That’s not the case if you operate a sole proprietorship.
- An LLC assets and debts are considered separate from your personal finances. So, if your business ends up failing, your own personal finances will be protected if you decide file bankruptcy for the business.
- Operating an LLC has tax advantages. You can choose for to include your business’ profits and losses as part of your personal tax return. If you do that, you can avoid facing double taxation.
- Operating as an LLC will give your business more credibility in the eyes of customers and when you are seeking business loans.
- An LLC can carry on if you decide to exit the business, sell the business or even if you unexpectedly pass away. Because an LLC is a separate entity, it can survive beyond your involvement in the business.
As part of filing an LLC, you’ll need a unique name for your business – one that no other businesses in Massachusetts has. Your LLC can be owned by one or more than one person and is easy to form and operate. It requires much less paperwork than operating a corporation does.
If you’re interested in forming an LLC, consult a business law attorney first to ensure you take the proper steps to legally launch and operate your business.