Making Business Happen

3 of the Top Benefits That Inspire People to Start LLCs

On Behalf of | Oct 9, 2023 | Business Formation

Those with groundbreaking business concepts and those who are ready to leverage their prior professional experience for personal profit may want to start a new company. Texas allows entrepreneurs to form numerous types of businesses, including sole proprietorships, partnerships and corporations.

Quite a few people planning a new business choose to start a limited liability company (LLC). An LLC is an organization run by members, and the number of members can range from one to a half dozen or more. Starting an LLC can be a bit more challenging than starting a simple sole proprietorship, but many people see the value in the extra effort because of the benefits an LLC provides. ‘

Protection from liability

Starting a small business involves both legal and financial risk. An entrepreneur’s future income and assets to be at risk if the company fails, gets sued or faces major expenses. An LLC is a separate legal entity and can therefore provide some degree of liability protection for the members who invest in and help operate the organization.

A more professional appearance

Sole proprietorships and informal business operations may not seem quite as professional as an LLC to members of the public. Particularly in a scenario with a sole member serving as the owner-operator of an LLC, having a structured business form can make prospective clients or customers more comfortable with patronizing the business. Instead of simply using the owner’s name, the LLC can have any business name not previously registered with the state of Texas and can therefore provide a veneer of professionalism that may not be available with simpler business forms.

The possibility of tax benefits

An LLC is subject to slightly different tax rules than either a sole proprietorship or a corporation. For some people, the unique income tax rules for an LLC that allow them to treat company profits as personal income could be financially beneficial. Entrepreneurs can significantly limit their tax obligations with careful accounting practices.

There are a host of other benefits that people can derive from forming an LLC when they want to do business in Texas. Considering every available business structure can help an entrepreneur make an informed choice when forming a new business entity.