Dealing With These Tricky Situations? You Might Want To Form An LLC
Starting a business can be difficult enough without having to second guess the type of formation that’s best suited for your endeavor. Just understanding the basics of sole proprietorships, corporations, and LLCs can be overwhelming for first-time entrepreneurs. But once you grasp the essentials, you’ll still need to determine when and how these formations would work to your advantage. In many cases, business owners will choose to form an LLC, or limited liability company.
The benefits of an LLC are immense, but how do you know if forming an LLC is the right decision? If you find yourself in any of the situations below, you may want to choose to start your LLC sooner rather than later.
- You want to protect your assets
If you possess real estate holdings, significant savings, valuable vehicles, or stocks and bonds, then you can protect these assets by forming an LLC for your business. That way, if your business is ever sued, these assets cannot be seized. While every entrepreneur must believe that his or her business will succeed, a smart entrepreneur will hope for the best and plan for the worst. If you want to protect your personal assets, come what may, then it’s time to learn how to form LLCs.
- You’re planning a short-term project
One of the benefits of an LLC is that they weren’t really designed for the long term, which makes them ideal for temporary projects such as creative collaborations or real estate deals. Corporations are better suited for large organizations that plan to stick around forever. When you form an LLC, you have to state how long it’s going to exist (don’t worry, this date isn’t set in stone in most states). That’s why they’re ideal for specific projects that have a finite expiration date. However, we should note that while this was the original intent of the LLC entity, times have changed; many companies also choose to form LLCs.
- You need to raise seed capital
Venture capital firms tend to invest in established corporations, but small investors actually love LLCs. So if you need to raise initial capital (typically less than $500,000) for your startup, you’ll fare well if you establish it as an LLC. And if you’re based in New York, Arizona, or Nebraska, you may actually benefit from state requirements to announce your LLC in the newspaper; it’ll make it even easier for investors to know about you!
- You want flexibility for your small business
Ultimately, one of the top benefits of an LLC is that they’re the best option for small businesses. An LLC formation can be used in virtually any situation or for any size business. You can essentially customize your LLC to fit your needs. When you need to start an agile business, the benefits of an LLC are clear.
While an LLC can help protect your assets, personalize your business, and even ease your tax burden, this type of formation isn’t right in every single circumstance. To find out whether an LLC formation is appropriate for your business or to learn how to form LLCs online, visit the My USA Corporation Learning Center today.