Should You Form an LLC?
If you’ve decided that you’re going to start your own business in South Carolina, then you have many options for how you legally form your entity. While many people are familiar with partnerships and corporations, a common favorite of the American entrepreneur is an LLC. Also referred to as a limited liability company, this structure has some unique benefits that you should know about.
It Avoids Double Taxation
One of the biggest warnings that you’ll see when it comes to setting up a corporation is the concept of double taxation. When double taxation occurs, both a corporation and its shareholders pay taxes on the money that they receive. When it comes to an LLC, the business income is reported on the tax returns of each member of the LLC. Therefore, the business taxes are only paid one time by the members of the LLC. This is one major benefit to consider during the business formation process.
Just as its name implies, an LLC provides limited liability for its owners. This type of entity considers the owners and the business itself as separate. This means that if the business owes debts that it cannot pay, creditors may not come after the owners of the LLC for the money. This is a major benefit that has led many American entrepreneurs to form an LLC over other types of business entities.
Deciding what type of business entity you want to set up is one of the biggest decisions of your entire business. This is because it affects your taxes and your legal structure. It’s a good idea to take the time to understand each different type of business entity and what its pros and cons are before making your ultimate decision. A business law attorney may provide assistance with determining the best choice for you.