LLC stands for Limited Liability Corporation. Yup. I said that to a new client. Luckily it was a friend who appreciated my sense of humor and wasn’t offended. But this advice – not necessarily with the same delivery – is advice that I find myself giving out frequently. There are usually two reasons:
- Someone is starting a new business. The LLC is a super flexible business structure. For a small LLC with a single owner, you don’t need to file a separate tax return just for the business. The information goes right on Schedule C. If you grow and want to be treated like a corporation, you make a few easy elections. If you take on a partner, you are automatically set to be taxed as a partnership. (Find out the difference between an S-Corp & an LLC here.)
- Someone started a business and did not pick a structure when they started. In this case, the default is a sole proprietorship. This type of business puts ALL OF YOUR ASSETS AT RISK! There is no separation between the business and the business owner. When a sole proprietor gets sued, he or she has unlimited personal liability.
To summarize, A Limited Liability Company (LLC) is the best option for your business if you want to avoid being liable during a lawsuit and want to have an easier time filing taxes. And that is why you should LLC that sh!t.
Have questions about what business structure is appropriate for your company? Schedule a consultation.