If you’re looking for a more secure future for your business, as well as some protection from all of the legal issues that may arise from running one, an LLC just might be the route you’ve been looking for. Whether you’re a freelancer, independent contractor, webmaster or any other classification of business owner – it’s in your best interest to protect your business (and your well being) by forming an LLC. Why? Well, an LLC offers corporate liability protection with little liabilities on your end. After having created your LLC, your company is treated like that of a “separate person” from yourself in the eyes of the law: having the ability of sign contracts, own property, hire employees, file lawsuits and perform various other actions. LLCs act through their “owners” or “members,” of whom you can designate. These members own a “membership interest,” or a stake of shares in your LLC. Alternately, it can solely include you with no other members.Your LLC will also shield you from many business liabilities. For instance, an LLC owner is not personally liable for legal debts or personal judgments against the LLC itself.

What Is an LLC?

An LLC, or Limited Liability Company, is a business entity that gives its owners and members ‘limited liability’ over the actions and debts of their company; with more flexibility than that of a corporation. Its primary benefit is that it is not double-taxed like a corporation. LLCs are low-maintenance entities that require little paperwork and record-keeping responsibilities, making them ideal choices for small businesses and sole proprietors looking for legal protection.

As an LLC Owner, What Am I Liable For?

You will only be liable for the money you’ve invested in your LLC. Creditors will not be able to go after your personal property or assets. There are, however, some limitations: an individual LLC member will be held liable if he or she personally guarantees a debt, intermingles personal funds with LLC funds, fails to pay state or federal taxes, commits fraud or other crimes, or has minimal capitalization or insurance.

Are There Any Disadvantages of Starting an LLC?

If you currently are or ever will be looking for outside investment, note that investors are typically more willing to invest in a corporation than an LLC, as they have the ability to file an IPO (Initial Public Offering).

How Much Does It Cost to Start an LLC?

With lawyer fees, the cost should be in the ballpark of $1800. However, that cost can be cut down to the mid $600’s with online LLC services like LegalZoom, bypassing the need to hire a lawyer (learn more).

Where to Go Next:  Comparing LLCs Against Other Entities