*Note that these are our interpretations and should not be taken as legal advice.

If you are working as a freelancer or independent contractor, you might have given some thought to becoming an LLC. For many individuals, this can be an excellent option to furthering their professional goals. However, you are also probably wondering what benefits are in it for you. Consider the following benefits of becoming an LLC.

Benefits of Becoming an LLC

Benefits of Becoming an LLC

You Have Flexibility When it Comes to How You Are Taxed

Once you become an LLC, you can choose to be taxed in two ways: as a disregarded entity or as a corporation. Disregarded entity is the same as a sole proprietor, resulting in the income from the LLC being treated the same as personal income. Which is best for you will depend on your individual circumstances, but becoming an LLC gives you the flexibility to choose. It is best to visit a CPA before you make your decision.

As You Would Imagine from the Name, You Have Limited Liability

But what does this mean? It means that you—and other members of the LLC—cannot be held personally liable for debts incurred by the business or court judgements made in regards to the business. This protects your personal assets in a way that sole proprietorship does not.

It Gives You More Credibility

Becoming an LLC means that customers, employees, vendors, and more will see you in a more official manner. Establishing an LLC shows people that you are truly committed to your business, that you have taken the time and given the proper attention to it to make it more concrete.

You Can Be Flexible with Your Management Structure

Corporations are required to have a specific structure to their operations, starting with the board of directors at the top and trickling down to the lower-level managers. LLCs are not required to follow a specific management structure, giving you the opportunity to do whatever works for you.

When considering whether or not to become an LLC, please discuss it with your tax preparer and your lawyer.

Benefits of Becoming an LLC

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October 5, 2015

Benefits of Becoming an LLC

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