Why Form an LLC?

LLCs are popular for entrepreneurs and groups seeking to launch a promising new business venture. Some common reasons why people elect to form LLCs include:

  • Low startup cost: Often, a limited liability company costs less to establish and run than a corporation. In some states, the fees are less than $100. LLCs are an ideal business structure for those wanting to start a company without needing to spend a lot of money.
  • Tax-related benefits: LLCs are unique in that they can be treated as pass-through entities and claimed on personal taxes, even as business assets get separated from one’s finances. Many LLC owners prefer this option as it helps avoid the possibility of double taxation. That said, LLCs may be treated as a sole proprietorship, partnership, C-corporation (C-corp) or S-corporation (S-corp) for tax purposes. Learn more about LLC tax benefits.
  • Liability shielding: As the name implies, running an LLC provides members and owners with some liability protection. For instance, successfully designating the business’s assets protects members’ assets if the company gets sued.