Should I Start An LLC For My Business Plan?

A limited liability corporation, often known as an LLC, can offer personal liability protection in addition to a legal framework for a company. Alternatively, you can receive these benefits by founding a company or some other kind of legal body to conduct business. 

Should I Start An LLC For My Business Plan

It is also entirely possible to launch a company without first establishing any kind of official structure. By going down this route, you will experience more simplicity when running your company, but at the expense of certain essential precautions.

When it comes to running a company, a limited liability company (LLC) is the best option for owners who want to defend themselves against potential legal action and protect their assets from creditors; have options for paying taxes that are to their financial advantage’ develop their company further, and build a reputation among the customers.

If you’re thinking of starting your own business, or perhaps you already have and are wondering whether forming an LLC is the right next step, then keep reading to find out all about this kind of business structure. 

The Benefits Of LLCs 

There are many advantages for small businesses to form an LLC. Here are a few of the most important ones. 

1. Personal Liberty Protection 

There is a variety of dangers that could befall a small firm, including product liability, personal injury, and/or infringement of trademark rights.

Any enterprise that exposes its owner to danger needs to be legally distinct from the enterprise itself. The protection afforded by this separation is known as limited liability.

When a firm has limited liability, the owner’s personal assets, including their car, house, and savings, are protected if the company is sued or fails to make payments on a debt.

2. Tax Benefits 

An LLC provides business owners with many different tax alternatives, which can be advantageous to a small business that maintains a consistent profit.

The pass-through taxation or the S corporation (S corp) tax classification are both options that are available to the owners of an LLC.

S Corporation Vs LLC

Being taxed as a default LLC is optimal for business owners who wish to reinvest profits back into the company, whereas the S corporation (S corp) tax status is optimal for enterprises that desire to distribute the majority of profits to the owners of the company.

Corporation Vs LLC

Creating a limited liability protection structure, such as an LLC or corporation, requires formation and ongoing maintenance. However, you have to figure out which type of business structure is most suitable for you.

A corporation is only beneficial to business owners who are required to accept investments from third parties.

This is due to how taxes are imposed on corporations. If attracting outside investors is crucial to the success of your business, forming a corporation could be beneficial.

At tax time, using an LLC structure is advantageous for any small corporation that does not require the participation of outside investors.

Credibility And The Trust Of Customers

Trust from customers and repeat business are essential to the survival of small enterprises. Establishing and maintaining your credibility is essential to the success of any firm.

Simply by becoming an LLC, a company can instantly boost the level of consumer trust they enjoy as well as its reputation.

How Much Does An LLC Cost?

The primary expense associated with the formation of an LLC is the state filing fee, which can run anywhere from $40 to $500, depending on the state in which you live. 

Your limited liability company can be established in one of two ways, you can either use an LLC creation service (though this will come with an extra fee), or you can go through the process yourself. 

What Are The Risks Of Not Forming An LLC? 

What Are The Risks Of Not Forming An LLC 

If you don’t establish an LLC or another type of business entity, you expose your finances to the risks associated with the operations of the business, and your business may experience difficulties due to the absence of a legal structure.

The following are some of the drawbacks of beginning a commercial venture without first forming an LLC:

1. Individual Legal Responsibility

If your company is sued or owes money to its creditors and you are the sole proprietor or general partner, you are personally liable for the debts of the company. Everything that you own will then be in jeopardy. 

You may also be held accountable for the actions of your co-owners and workers that are related to the firm. Adding an LLC into the mix alters the dynamic.

As the owner of an LLC, you run the risk of losing everything you’ve put into the company, but your personal belongings, including your house, bank accounts, and other assets, are safe.

2. Ineffective Business Structure 

Many people who go into business together don’t give much thought to the specifics of how to distribute responsibilities, profits, and losses, or what will occur if there are disagreements or if one of them wants to leave the partnership. 

These concerns are bound to rear their heads at some point. Your LLC operating agreement should provide standards and a framework to help reduce costly disagreements in the future.

3. Harder To Get Funding 

Financial institutions and investors may be hesitant to make loans or investments in general partnerships or sole proprietorships.

4. Someone Could Steal Your Company Name 

When you form an LLC, you help assure that the name you have selected is one of a kind and will continue to be so, as it’s against the law in your state for two different business entities to have the same name.

Can I Form A Business Without An LLC? 

Yes, you can. There are two different kinds of legal alternatives to forming an LLC to manage a business.

The first step is to submit the necessary papers to the relevant authorities in your state to establish a different kind of business entity, such as a limited liability partnership or a corporation.

There are a variety of business entity types, each of which has its own set of advantages; nonetheless, they are united by a major benefit: limiting your responsibility for corporate debts.

You also have the option of running your business without ever formally establishing it as a separate corporation. You will be considered a sole proprietor if you are the lone owner of the business. 

A general partnership on the other hand describes the legal structure that exists when one or more people share ownership of a business. 

Out of these two above options, your best bet would be to set up as a sole proprietor. This comes with a few advantages including:

1. It’s Quick And Easy 

You won’t have to submit any paperwork to the state to get started, which speeds up the process a bit.

However, you may still be required to obtain a business license or permits from your community, and if the name of your company differs from your real name, you may be required to register a fictitious name, sometimes known as a DBA (doing business as).

2. Low Cost 

You won’t be responsible for paying the annual reporting charge or the business creation fee that your state requires. In addition to this, you won’t have to pay somebody to serve as your company’s registered agent.


The next stage in expanding your company and safeguarding your assets is to form a limited liability company (LLC). If you are serious about expanding your company and making a profit, you should organize it as an LLC as soon as possible.

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