If you have a small business, or are thinking of starting one, you need to think of the liability implications of doing so. There are potentially greater legal liabilities you are subjected to as your own boss that you did not have to worry about before you became an entrepreneur.
One other issue that you have to think about when you have your own business is taxes. Small business taxes are handled much differently than personal taxes, so you have to be aware of what is going on with your company taxes. Of course, this is where an accountant can come in real handy.
Operating as a sole proprietor is always an option, though in most cases it is not the best choice. There are several liability and tax reasons why you should not operate as a sole proprietor. Meeting with a professional regarding these issues is highly recommended.
So what can the average entrepreneur do? Smart small business owners create a business entity to shield themselves personally from liability and to take advantage of corporate tax laws.
A very common business structure, and probably the best choice for most business owners, is to think about starting an LLC. Set up and run properly, a limited liability company, or LLC gives you liability protection personally. Also with an LLC, you can can pick how you should be taxed.
Setting up an LLC is incredibly simple. You can pay a lawyer to do it for you, which is generally a more expensive choice. Another option is to use one of the less expensive online business creation services for LLC incorporation. There is no reason to not form a limited liability company with prices starting at $115.
Always talk with a professional to make sure LLC incorporation is the right form for your business. It is vital to make sure that you have your business set up correctly to limit personal liability and to take advantage of the tax benefits given to companies.
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