There are certain possible liability ramifications that you need to consider if you are thinking of starting, or already have started, a business. When you are an entrepreneur, you are potentially subjecting yourself to more legal liability than you had to deal with before you owned a business.
Another thing that you have to think about when you are an entrepreneur is taxes. Small business taxes are handled much differently than personal taxes, so you have to know of what is going on with your company taxes. Of course, this is where an accountant can come in real handy.
While you most likely can run your business as a sole proprietor, this is not the best choice in most cases. There are huge liability and tax reasons why you should not be a sole proprietor. Getting professional advice in these issues is recommended.
So what should the average small business owner do? Wise entrepreneurs form some sort of business structure to shield themselves from personal liability and to take advantage of small business tax laws.
A common business entity, and most likely the best choice for most entrepreneurs, is to think about creating an LLC. A limited liability company, or LLC can give you personal liability protection, assuming it is set up correctly and you totally separate your business and personal affairs. And with an LLC, you have the ability to choose how you should be taxed.
Setting up an LLC is very easy. The more expensive option is paying a lawyer to set up your LLC. Or, you can use a reputable Internet business formation services for forming an LLC. There is no reason to not form an LLC with prices as low as $115.
Consult with a professional to see if LLC formation is the right choice for your business. At the very least, you need to take some action to ensure that your business is separated from you, to reduce your potential liabilities and take advantage of the tax benefits of owning your own business.
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