A lot of people think that forming an LLC is just a way to separate commercial assets from personal assets. But there are many other benefits to forming an LLC, including the ability to protect your business from liability and tax savings. Let’s take a closer look at these advantages:
Liability Protection For Owners
An LLC is a business structure that protects its owners from liability. Unlike other types of businesses, an LLC isn’t required to operate as a separate entity and can have multiple memberships.
This means that if you own an LLC, your assets aren’t protected by the company’s assets—but they are protected by your assets (like your home).
In addition to providing liability protection for owners, there are also benefits associated with forming an LLC.
Ownership Flexibility And Control
As mentioned above, having multiple memberships allows for greater control over how much money each shareholder will receive from the profits generated by their investments in the company; this may not be possible with sole proprietorships or general partnerships due to the limited number of shares each owner holds (unlike corporations where there are unlimited shares).
No Double Taxation
One benefit of an LLC registration is that it doesn’t pay federal income taxes like other types of business structures do because all profits pass through directly into accounts controlled by individual shareholders rather than being distributed as cash dividends out into other people’s pockets whom they don’t know personally nor trust fully enough not take advantage of them when needed most during times when money gets tight.
Tax savings are one of the most important advantages of forming an LLC. While you’ll pay taxes on your income as an individual, you’ll also be able to deduct certain expenses from that taxable income. These deductions could include:
- Professional fees for lawyers and accountants who help with the formation or operation of your business;
- Annual membership dues for professional associations; and/or
- Legal fees related to incorporating or registering your company (if applicable).
Aged Llcs Can Sell For More When It Comes Time To Exit
When you sell your business, it’s important to take into account the age of your company. Aged LLCs can sell for more when it comes time to exit.
The longer a company has been around, the more valuable it becomes because of its track record and assets.
Aged LLCs generally have higher sales than startups or new businesses that haven’t been in business long enough to show stability and longevity—and therefore command higher prices on the market today than they would if they were just starting with no track record yet!
For example, if you own an aged LLC but decide not to sell it anymore (or if someone else buys it from you), then what happens now?
Your profits will continue flowing into those accounts until either one thing happens: either someone buys them outright, or their assets are liquidated through sale or bankruptcy proceedings after which everything is sold off piecemeal by creditors who’ve seized control over everything left behind during such events as Chapter 7 Bankruptcy filings where most assets must be sold off first before any money can be returned into individual investors’ accounts once again.
Raising Money Is Easier
An LLC is a legal entity, which means that it can raise money from investors. You can give the investors voting rights and equity in the company (which could be sold).
If you want to raise money for your venture, an LLC is an excellent option because it allows you to do so without having to go through the hassles of registering as an individual or getting approval from your state’s government.
If an investor wants out of their investment after some time has passed, they will usually have no problem selling their shares back to others at market value.
Having An LLC Makes It Easier To Get A Business Loan
One of the most important advantages of forming an LLC is that it can be used as collateral for a loan. The LLC itself serves as security for the loan, so you don’t have to put up personal assets like stocks or property.
This makes it easier to get financing when you need it and also protects your family’s assets from being taken by creditors in case something goes wrong with the business later on down the road.
An LLC Makes It Easier To Defend Your Intellectual Property (IP)
An LLC provides a defence in court for your IP. If you own an LLC, the company itself can be used as proof that it is yours.
- You can protect your IP from infringement by using copyright and patent laws to prove that you hold exclusive rights to use your intellectual property (IP).
- With an LLC, you can sue for infringement of your IP with little or no risk of being sued back by the person who had their name on something without permission.
An LLC Shows Customers And Suppliers You’re Serious About Your Business
An LLC will show customers and suppliers that you are serious about your business. This is especially true if your company has a high profile among its target audiences, such as a large corporation or government agency.
An LLC can also be more attractive to potential lenders than a sole proprietorship or partnership because it offers greater protection from lawsuits and creditors if something goes wrong in the future.
In certain cases, lenders may also require an LLC as part of their approval process for financing options such as loans or lines of credit.
In addition, forming an LLC makes it easier for investors looking for long-term returns on their investments (such as venture capitalists). They know that if one partner leaves the company with all their shares still vested, those remaining partners will not have any claim against each other or against anyone else who owns any property held by either party individually—which could result in huge costs being paid out because someone else would want compensation due them.
An LLC Is A Right Choice For Many Small Businesses
An LLC is the right choice for many small businesses. It offers a lot of flexibility, and it’s easy to set up and run.
An LLC is also a legal entity that separates your assets from your business assets, so you can avoid probate if you die or become incapacitated.
This means that if something happens to one member of your LLC (like bankruptcy), all of its members are protected by state law and won’t lose their possessions like stocks or homes in the event of death or disability.
In addition to being easy to use and flexible, an LLC can be formed in all 50 states (and Washington D.C.).
The bottom line is that LLCs are a great choice for small businesses, but they aren’t right for every business. If you have any questions, feel free to reach out to your lawyer or any LLC formation service provider. They are there to help you make the best decision possible when it comes time to form an LLC.