How do businesses benefit from incorporating or forming an LLC?
Incorporating, or forming a limited liability company, can have a profoundly positive impact on your business. Whether your business is still finding its footing or just went viral and recorded its biggest sales to date, there are benefits to incorporating or forming an LLC. Three of the most significant benefits include:
Protecting your personal assets
Whenever you're doing business, there's always a possibility for liability. Let's say you own a restaurant. If your business isn't incorporated, your personal assets are tied to your business with no distinction in the eyes of the law. If someone gets hurt at your restaurant, that person may be able to sue you and your business. And since there is no separation between your personal assets and your business, your personal assets, like your car, home, and savings, can be at risk.
Even if your business doesn't entail possible physical injuries, there are still many possibilities that may put you in a risky position if you have not formed an LLC or incorporated. In the end, it's safer to protect you and your personal assets so you can avoid a potentially huge legal mess.
Taking advantage of tax benefits
Depending on the business entity you choose, you're usually able to draw a salary, avoid a higher tax bracket if you've been operating as a sole proprietor, write off business-related expenses and losses, and more. All that new office equipment you bought? You may be able to deduct those expenses on your taxes — as long as you follow the IRS’s rules for business deductions, of course.
Growing your business
Formalizing your business structure allows you to obtain loans from banks and lenders much more easily. It also sets you up to take on investors, hire employees, and more. What does this mean for your business? It means that your business can set itself up for success and get access to more capital to grow. That extra padding of funds can help you be competitive in your industry.
Additionally, if you form a Corporation, you have the ability to sell stocks. This gives you another avenue to acquire capital. Selling stocks can attract investors that can offer funds and guidance as you continue to grow your business for the future.
How simple is it to form an LLC or corporation?
For many small business owners, forming an LLC or corporation may seem overwhelming or out of reach. Legal protection for you and your business, however, does not have to be a burden, or cost an arm and a leg. Incorporating or forming your LLC with Rocket Lawyer is simple, affordable, and can be done in a three quick steps:
1. Make or update your Business Plan
It can be a challenge to figure out which type of business entity is best for you and your business. It only takes a few minutes, however, to make or update your Business Plan, which can help you understand where your business may be headed.
2. Talk to a professional
If the whole process of choosing an entity type feels overwhelming, or you are ready to get started, talk to a Rocket Lawyer business formations specialist. Rocket Lawyer helps thousands of business owners structure their businesses every year and can answer your questions about the whole process.
3. Answer a few questions. We’ll take care of the rest.
Once you've figured out the best entity type for your business, you can incorporate or form your LLC easily and affordably with Rocket Lawyer. Just choose your state and your business entity type, fill in the required information about your business, pick the option you want, then check out. That's it!
Don’t wait to level up your business
Waiting to form an LLC or corporation can leave a business owner unready to answer the call when opportunity knocks. Waiting can also put owners on the hook, personally, for the debts of the business, or if the business is found liable in a lawsuit. Owners that wait to see if their business will be successful before taking the next step ignore the fact that if the business is not successful and is run as a sole proprietorship or partnership, rather than an LLC or corporation, it’s the business owner and their personal assets that will be held responsible.
Protecting yourself and your business is easier than you might think, and Rocket Lawyer is here to help you every step of the way. If you have more questions about forming an LLC or incorporating your business, reach out to a Rocket Lawyer network attorney for affordable legal advice.
This article contains general legal information and does not contain legal advice. Rocket Lawyer is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.