Are you looking to start a new business here in Pennsylvania? If so, you could simply rent some space and open your doors. However, as a sole proprietorship, you may find yourself personally liable for acts that occur in the course of your business and encounter other unpleasant legal and financial consequences. For some people, doing business this way makes sense, but it may not for you.
You probably already ruled out a corporation since you don't want all of the legalities and paperwork requirements that go along with it. For this reason, you may be considering creating a limited liability company, or LLC, but want more information before moving forward.
What can an LLC offer you?
An LLC is essentially a cross between a corporation and a sole proprietorship. You receive some of the benefits of each without some of the disadvantages. For instance, an LLC provides you with the following benefits:
- You won't have to file an income tax return for the company. The business' taxes go on your personal income tax return, which eliminates the double taxation of corporations.
- You receive some protection from personal legal and financial liability for lawsuits, debts and other monetary threats to the LLC.
- You don't have to be a permanent resident or U.S. citizen to operate an LLC here in the United States.
- You won't have to deal with the same legal compliance and paperwork issues that you would if you formed a corporation.
If these advantages sound attractive to you, then an LLC may be the right choice for your business. However, in order to make it clear that there is separation between you and the company, you may want to create an operating agreement that clearly delineates the responsibilities of the company's members, along with an outline of daily operations and more.
Forming an LLC is not necessarily a complex process, but it is important to get everything right. Simply filing a piece of paper with the state doesn't necessarily guarantee you will receive all of the benefits this entity structure offers. You could increase your chances of using an LLC to the fullest extent possible by enlisting the aid of an experienced business formation attorney who can guide you through the process and help tailor your operating agreement to your needs.