When you feel that you are ready to begin your business formation efforts, one of the first things to consider is how you will structure your Pennsylvania business. You have several options to choose from, including:
- A corporation
- A partnership
- A sole proprietorship
- A limited liability company, or LLC
If you want to give your business its best chance of success, it is smart to consider these options carefully. On your own, you can conduct all the research you want before choosing a business structure. However, you may also benefit from consulting with a law firm practicing in business formation. This will give you access to experience, advocacy and insight into the state’s business law.
It is also helpful to study the advantages each structure provides. Most new entrepreneurs choose to form an LLC because of its many benefits. Three of the most valuable of these benefits include the following.
Liability protection: With an LLC, only the company is responsible for liabilities and debts the business accrues. This means that you will not have to pay for these debts out of your nonbusiness funds.
Fewer taxes: Unlike several other business structures, LLC owners typically pay less in taxes. In most cases, income and losses acquired by the business are taxed as personal income instead of business income.
Reduced compliance regulations: As you may know, all businesses must comply with the state’s regulations. However, LLCs are usually exempt from many of the formalities required in other types of business structures.
It is wise to continue learning more about choosing a structure early on in your business formation efforts. A legal advocate can help you find answers to any questions or concerns you may have about forming an LLC.