Run a business, however small? Here's why you may want to incorporate or form an LLC.
Most people who run their own business start off solo or working with family members. Even if your business stays that small, and especially if you are going to pay someone else, there are good reasons to incorporate or form an LLC.
Protect your personal assets. This is the reason most people think of forming a legal entity - to limit your liability for business debts and liabilities. Many people don’t know that to keep this protection, the business owner must follow corporate formalities.
Tax treatment. An LLC can be taxed similarly to a sole proprietorship while limiting liability, or the owner can elect to be taxed as a corporation. A corporation owner can be taxed at the corporate and individual levels or can elect for Subchapter-S status, if qualified. (Confused? An accountant can help with this decision.)
Deductible business expenses. During tax computations, both LLCs and corporations can deduct businesses expenses, including salary, before reporting income.
Lasting legacy. An LLC or corporation continues if an owner or management changes, whereas a sole proprietorship or partnership ends if an owner dies or quits. A legal entity is one way to ensure your business lasts longer than you do.
Need help and advice from experienced attorneys? Contact your local attorneys at Levine Law. www.levinelawma.com