If you are starting a business in Pennsylvania, there are options when it comes to how you legally form it. However, each option comes with pros and cons.
One of the most popular business formation types is the limited liability company or LLC. It is a popular choice for sole-proprietors. Take a look at three of the benefits forming an LLC may provide.
1. Options for paying taxes
Businesses pay taxes as required under federal and state laws; however, there are options. An LLC allows you some latitude for how your business pays taxes. You may decide on a pass-through option, which means the profits go directly to you and any co-owners, leaving tax payments to the individuals and not the company. This is similar to an S-corporation designation for paying taxes. A C-corporation designation forces both the business and the owners to pay taxes on profits.
2. Flexible ownership options
An LLC allows for a more fundamental approach to business ownership. Unlike other business structures, an LLC does not require board meetings, officers or shareholders. This allows for much more flexibility in making business decisions and changes.
3. Personal liability protection
One of the critical components of an LLC is personal liability protection for the owners. Should the business face a lawsuit and judgment, an LLC shields your personal assets from seizure. The same umbrella applies to creditors and anyone else who tries to recover money from the business.
A new business is exciting and offers a wealth of growth opportunities. Creating an LLC may give you the simplicity and protection such an endeavor requires.