If you’re a freelancer, forming an LLC can seem like another thing to worry about. You’ve got your business plan and tax return to file, but an LLC is just one more piece of the puzzle.
A lot of small businesses operate as single-member LLCs because they don’t want all their assets locked up in one place. But there are also benefits to forming an LLC that aren’t so obvious.
The benefits could help protect your work from lawsuits or even provide you with tax breaks when filing as a single member. So why form your own limited liability company?
Forming An LLC Can Be One More Thing To Worry About, But It’s Often The Best Way To Protect Your Business
Forming an LLC is a great way to protect your personal assets and liability. It’s also one more thing to worry about, but it’s often the best way to protect your business.
An LLC can be used by any kind of business, so you don’t have to worry about whether or not you’ll need one when starting a new venture.
This means that if you’re just starting a freelance career as an author or musician, there’s no reason why forming an LLC shouldn’t be on your radar screen!
When You’re Starting A New Business, You Don’t Want All Your Assets In One Place
When you’re starting a new business, you don’t want all your assets in one place. Instead of having the risk of getting sued or facing any other legal issues, forming an LLC can help protect your assets.
Benefits
- You can run your business as if it were a sole proprietorship or partnership without paying taxes on capital gains; this is because LLCs are taxed like corporations and not individuals (like partners). As such, they are also exempt from payroll taxes as well.
Disadvantages
- Forming an LLC does not shield you from liability arising from mismanagement of the business; if something goes wrong with an employee’s actions or lack thereof during working hours then they could sue you personally instead of suing just one person who owns 100% ownership rights over everything related to his company/business partnership, etc.
A Small Business Is Not An Ordinary Business
LLCs can indeed be created to operate any type of business, but they tend to be used more frequently by freelancers who want to protect themselves from liability and liability risk.
For example, if you have a laptop that gets stolen while you’re on vacation, how can you get reimbursed if someone steals it? By forming an LLC (and assigning all ownership rights), the courts will treat your property as belonging solely to your client—not yours—and therefore render any recovery unlikely.
Preparing For The Worst Case Scenario Is All Part Of Being Smart As A Small Business Owner
When you decide to start your own business, it’s important to prepare for the worst-case scenario. You can protect yourself from lawsuits and other legal problems by forming an LLC. For example:
- You may want to protect your personal assets from business debts.
- Your company could have liabilities that are separate from its owners’ personal assets (for example, if someone gets injured on the job). In this case, it makes sense for all owners of a given entity—either individuals or partners—to be protected as well because they share responsibility for those liabilities together with their respective contributions towards them (this will also reduce the risks of multiple claims against one person).
Filing As A Single-Member LLC Has Its Own Tax Advantages
If you’re considering starting your own LLC, be sure to take into account the tax advantages that come with forming an LLC. The single-member LLC is a good option for freelancers because it allows them to choose how they want to be taxed.
They can choose between being taxed as an S corporation or C corporation, which will have different benefits depending on their situation.
As a freelancer and sole proprietor (SP), if you choose not to form an SP but instead opt for the single member version of this structure, then you’ll get additional benefits over being treated as either an independent contractor or employee:
- Only one person needs to file paperwork with their state’s secretary of state—the other members won’t need any paperwork filed at all!
- If they do file paperwork with their state’s secretary of state, though? It takes less time than doing so with corporations!
The Benefits Of Forming An LLC Don’t End There
As you can see, the benefits of forming an LLC are numerous. From the perspective of your business, it’s important to weigh the pros and cons before deciding whether or not to form one.
If you’re thinking about starting a new business and want to make sure that it’s set up in such a way as to maximize its success, then consider incorporating it as early on as possible.
No Matter The Kind Of Business You Have, The Limited Liability Company Is A Valuable Tool
No matter the kind of business you have, the limited liability company is a valuable tool. It can be used for any kind of business and protects you from liability for the actions of your business.
If someone sues your LLC because they were harmed by something that happened in its operation, they’ll only be able to collect damages against your personal assets.
This is especially important if you’re planning on raising money via an LLC because it gives investors peace of mind knowing they won’t risk losing their money if anything goes wrong with their investment in your company’s operations.
LLCs Are Great For Small Businesses And Can Make It Easier To Protect Yourself Against Things That Could Go Wrong
An LLC is a great way to protect your business, both against things that could go wrong and potential lawsuits.
LLCs can help you avoid personal liability. If someone sues your company and the judge finds that you were at fault in some way, they could hold you personally liable for any damages awarded against them—even though there are no actual assets left over after paying off those who sued!
This is why it’s important not only to hire good legal help but also to make sure that all parties involved have signed agreements addressing who will be responsible for what if something happens.
LLCs also have their own tax advantages; this means less paperwork compared with sole proprietorships or partnerships where everything must be filed through an accountant each year (or quarterly if they’re big enough).
In addition, having fewer overhead costs compared with small businesses that are just starting out doesn’t hurt either since many companies face high start-up costs so having these savings built into their finances early on helps alleviate some pressure later down the road when making decisions about hiring more people etcetera…
Summary
If you’re thinking about forming an LLC, it’s a good idea to consult with a lawyer first. You’ll want to make sure that everything is set up properly and that you’re protected for the long term.
