Once you've formed your LLC, your small business is ready to take off. In addition to protecting yourself from personal liability and offering a more official presentation, there can be big tax savings for both your business and your family. The three major tax benefits to creating your LLC are:

Get started Start Your LLC Answer some questions. We’ll take care of the rest.

Flexibility in how you're taxed

LLCs can elect how they are taxed. This is probably one of the best—but least understood—advantages of forming a LLC. You can decide whether it's better to file your taxes as a "disregarded entity" or to get corporate treatment. A disregarded entity is treated the same as a sole proprietor, so your LLC's income will be treated like personal income. If you choose corporate taxation, your business will be taxed at a lower corporate rate for the first $75,000 of income. Any LLC can choose this tax treatment by filing IRS form 8832. Both of these approaches can have big advantages, depending on how much income you personally want to take and how much you plan to reinvest in your business.

Because everyone's situation is unique, you should consult with a CPA or other tax professional to drill down into your financials so you really understand which option is best for you.

Larger contribution limits

Your LLC allows you to set up both retirement funds and life insurance policies with greater contribution limits so you can set aside money for your future and your family.

Leasing assets

Your LLC also allows you to lease your personal assets to your corporation. For example, if you use a home office to run your LLC, the LLC could lease the office from you (the person). By doing so, you'd be able to create a business expense the LLC could write off, while adding more income to your family's bottom line. Keep in mind that these expenses must be legitimate business expenses and you will need to have a formal lease agreement in place.

No matter how you run your business, don't forget that business expenses can be deducted. Most importantly, you can deduct the cost of forming your LLC—so make it a practice to hang on to all your receipts.

Ready to create your LLC? Visit our LLC Map for a rundown of everything you’ll need in all fifty states. If you’d like more information about starting a business our guide may be able to help.

Get started Start Your LLC Answer some questions. We’ll take care of the rest.

Get started Start Your LLC Answer some questions. We’ll take care of the rest.