{"id":63114,"date":"2020-09-25T04:10:29","date_gmt":"2020-09-25T11:10:29","guid":{"rendered":"https:\/\/lenpenzo.com\/blog\/?p=63114"},"modified":"2021-09-26T09:32:53","modified_gmt":"2021-09-26T16:32:53","slug":"why-smart-entrepreneurs-form-llcs","status":"publish","type":"post","link":"https:\/\/lenpenzo.com\/blog\/id63114-why-smart-entrepreneurs-form-llcs.html","title":{"rendered":"Why Smart Entrepreneurs Form LLCs"},"content":{"rendered":"

\"\"When you start your company, it is usually classed under sole proprietorship. With a sole proprietorship, you have full control over your business and its assets, as well as enjoying very little paperwork to file with state and national agencies. But that’s just about it when it comes to the benefits of sole proprietorships.<\/p>\n

In the event that your business runs into legal troubles, the sole proprietorship business structure does not offer any kind of liability protection — holding you (the owner) completely responsible.<\/p>\n

That’s why it’s encouraged to change your business structure as soon as you can. An LLC is one of the most popular of the business formations out there for small businesses — and with good reason.<\/p>\n

In this post, we’ll take a look at the perks of incorporating as an LLC.<\/p>\n

It protects your personal assets<\/strong><\/p>\n

For most business owners, the protection they get from forming an LLC is the main reason why they decided to move on from the sole proprietorship business structure. None of your personal and business assets are safe once a judgment against you is made — from the funds in your checking account to even a portion of your monthly earned wages. An LLC creates a separation between your personal and business assets, so while it’s possible for you to lose the money you invested in case your business has a run in with the law, your personal finances will still be intact.<\/p>\n

It legitimizes your company<\/strong><\/p>\n

Many small businesses struggle with getting new clients and customers since it takes time to build credibility and a loyal client base. Social Media Today points out that small businesses<\/a> often resort to temporary solutions to improve their business perception. But long-term solutions entail improving the digital presence of your business, from creating a well presented website to claiming and verifying your Google My Business status. However, forming an LLC and becoming a legal entity further legitimizes your business as it proves that your business is registered with the state.<\/p>\n

It’s easy to apply for<\/strong><\/p>\n

The great thing about filing to incorporate as an LLC is that it doesn’t require a ton of paperwork or consume a lot of your time. In fact, filing an LLC in California can be broken down into just six steps. Entrepreneurs must first find a name for their LLC that’s unique from any other business in California. Then they have to appoint a registered agent to process it. Afterwards, they can file articles of organization and the initial statement of information. What comes after that is creating an operating agreement that outlines the LLC’s ownership and sets the company guidelines. Lastly, entrepreneurs have to apply for an employer ID number by simply completing an application form on the IRS website.<\/p>\n

It doesn’t come at a high price<\/strong><\/p>\n

Filing for an LLC is also relatively inexpensive, as the average national cost of registering an LLC is just $500, and could be even less depending on your state. For example, California-based entrepreneurs can save $70 by hand-delivering their articles of incorporation instead of e-mailing them to the Sacramento Secretary of State’s office.<\/p>\n

It has tax advantages<\/strong><\/p>\n

Lastly, you can choose how your business is taxed once you transition to an LLC business structure. In fact, sole proprietorship<\/a> makes you more liable for your business’ taxes as this particular structure does not consider your business as a separate entity. On the other hand, LLCs can choose to be taxed either as a partnership or corporation. However, most LLCs choose to file for S Corp status to maximize their tax benefits. This is also known as a pass-through entity, meaning that your salary will be an expense under your business. This can free business owners from the exorbitant taxes of sole proprietorships, as they’re required to only pay taxes on their own salary.<\/p>\n

Without a doubt, incorporating as an LLC offers a ton of unmatched benefits for business owners. So if you’re still under the sole proprietorship business structure, be sure to weigh up your options and form an LLC as soon as you possibly can.<\/p>\n

Photo Credit: pixabay<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

When you start your company, it is usually classed under sole proprietorship. With a sole proprietorship, you have full control over your business and its assets, as well as enjoying very little paperwork to file with state and national agencies. But that’s just about it when it comes to the benefits of sole proprietorships. In […]<\/p>\n","protected":false},"author":13,"featured_media":63115,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_mo_disable_npp":"","pmpro_default_level":"","_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"","_genesis_layout":"","footnotes":""},"categories":[455],"tags":[],"class_list":{"0":"post-63114","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-business","8":"pmpro-has-access","9":"entry"},"yoast_head":"\nWhy Smart Entrepreneurs Form LLCs<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/lenpenzo.com\/blog\/id63114-why-smart-entrepreneurs-form-llcs.html\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Why Smart Entrepreneurs Form LLCs\" \/>\n<meta property=\"og:description\" content=\"When you start your company, it is usually classed under sole proprietorship. 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