Some years back, many people registered their businesses as sole proprietors because they wanted total control over their assets. However, this has changed now as many start-ups are being reported as Limited Liability Companies (LLC). This is because people have realized the benefits of running your business as an LLC.
When setting up a business, there are several forms your business can take. It can be a partnership, sole proprietorship, an LLC,
Here are some of the primary reasons why you should run your venture as an LLC:
To Protect Personal Assets
One of the main advantages of an LLC is limited personal liability. When you run a partnership or sole proprietorship, you and your business cannot be treated as a spate entity. This means that if your business incurs liabilities, personal assets can be used to settle these liabilities.
On the other hand, if your business has become an LLC, you are treated as a separate entity. This means that personal assets are shielded from being used to pay liabilities incurred by your LLC business. Even if you lose the money invested in the venture, personal assets will remain intact.
To Enjoy Tax Benefits
When it comes to tax benefits, LLCs benefit the most. Governments understand the significant role companies play in helping the economy of a country grow, and as a result, LLCs are given tax benefits to attract more investors. When your business operates as a sole proprietorship, it is taxed on everything as it cannot be treated as a separate entity from the owner.
On the other hand, when running an LLC, you have several options in which you can choose to be taxed, either as a corporation, a partnership, or even sole proprietorship. LLCs usually get tax incentives, which can help reduce your tax expenditure.
To Have Flexibility in Management
Another huge benefit of operating an LLC business is that it offers flexibility in management. Running a corporation is much difficult when compared to an LLC. Corporations’ management entails a fixed management structure made up of the board of directors and officials responsible for overseeing policies and the business’s day-to-day running.
LLCs, on the other hand, have a more flexible way of running the business. You do not have to follow the formal structure of corporations strictly. However, you can run your business in whatever way you think is best and explore various options for decision-making.