As a business owner venturing out into a new business plan, or perhaps even the first one, it is important to first decide what structure you want your business to take.
You have many options available to you. One of the most popular is an LLC, which provides many benefits and few drawbacks.
Limited liability
Nerd Wallet looks into building successful LLCs. The main draw of an LLC is, of course, the limited liability aspect of it. LLCs allow you to make a clear divide between your business assets and your personal assets. If your business ends up going under and you have to file for bankruptcy, you can rest at ease knowing that your personal finances will not get targeted.
Flexible management and upkeep
Other, lesser-known benefits include flexible management and easy startup and upkeep. You do not have to worry about piles of complex paperwork when creating your LLC. On top of that, you can have a more free formatted system of management. You do not have to worry about annual or bi-annual meetings with shareholders and upper management can move around freely.
Potential downsides
There are still some downsides, though. For example, the LLC structure does not always protect your personal assets. If you run your business fraudulently or do not clearly separate your business transactions, you could end up paying the price if your business financially suffers.
Member turnover is also something of a pain, as you have to start a new LLC from the ground up if any member leaves. On top of that, the yearly taxes an LLC faces can vary greatly from state to state and cost quite a bit in some places.
But if these are not deterrents, then you may prefer the benefits of an LLC.