2015  

Below are some of the reasons to make your business a LLC or Corporation.

1. Protect Your Personal Assets When you operate as a sole-proprietorship, you are entirely and personally responsible for the actions of the company. Any legal actions could take your home, your kid’s college funds, personal investments, etc.

2. Protect your company name Creating a State level LLC or Corporation protects the company name from others using the same name.

3. Add Creditability to your Company Adding the LLC or Inc to your company name can add instant legitimacy and authority for your customers.

4. Perpetual Existence If something were to happen to a small business owner, the business would cease to exist. LLCs and Corporations can continue with a change in ownership at any time.

5. Tax Flexibility A LLC is taxed at the same rate as a sole proprietorship while providing limited exposure to personal liability. Though profit and loss typically pass through an LLC and get reported on the personal income tax returns of owners, a LLC can also elect to be taxed as a corporation. When an entrepreneur sets up a corporation, he or she is taxed on both the individual and corporate levels. However, a corporation can avoid double taxation of corporate profits and dividends by electing Subchapter S tax status.

6. Deductible Expenses Both corporations and LLCs may deduct normal business expenses, including salaries, before they allocate income to owners.