Introduction

You, as an aspiring entrepreneur who is interested in starting your own business, may wonder how to launch your own venture, whether you need to create an LLC, known as a limited liability company, and what the benefits of setting up such a business structure are. On the other hand, you may lean toward being self-employed and not being involved in business formation. How to choose?

If you are still in doubt about your decision, then this article will help you make up your mind. We will cover the issues like what the term LLC means, why establishing an LLC company will be beneficial for the self-employed, and, finally, how to rid yourself of the hassle of forming a new business by entrusting it to one of the LLC creation services, like LegalZoom, MyCompanyWorks, or Rocket Lawyer.

What is an LLC and Why Is an LLC Formation So Popular?

Michael Coulson, https://bestllcservices.co/, defines a Limited Liability Company, or an LLC for short, as a form of a private company, which is a financially transparent organization and combines a partnership, sole proprietorship, as well as the characteristics of a corporation. In contrast to the establishment of a corporation, the founders of the LLC are not responsible for paying taxes, but for the non-tax liabilities of the LLC.

The creation of an LLC is perfect for the small business owners with one or more partners. Speaking about the peculiarities of running a company, only the company’s founders can manage it.

What makes an LLC popular with entrepreneurs, though?

A Limited Liability Company (LLC) is characterized by the limited liability of its members in the amount of their contributions;
In addition, this form of business activity offers a great flexibility in terms of its structure, management, and taxation. For the owners, of course, flexibility in the management and distribution of the company’s profits is extremely valuable. The members of an LLC in the United States can generally agree to distribute profits and losses among themselves in any way they wish. They are not obliged to allocate them according to their investments;
Most states also allow LLCs with only one owner to be registered;
An LLC is characterized by pass-through taxation, which means that all profits and possible losses go to the owners of the company. Providing income tax returns for all participants of a limited liability company is also a must. The losses of the company are also entered into these returns. This is one of the similarities of an LLC with a partnership;
There is also another key advantage of limited liability companies. It refers to the small amount of paperwork to be filled out and submitted to the relevant government agencies when registering a company.

Is an LLC a Good Option for the Self-Employed?

There are actually several differences between being self-employed and running a limited liability business. However, someone who is actually self-employed can establish their own LLC. In fact, a self-employed person can set up an LLC for many reasons, including the following:

Limited Liability Insurance: If you want to run your own business, forming an LLC is a good idea to protect your personal liability for the debts and liabilities of your business, since your and the business’ assets will be separated. In other words, an LLC protects your personal property;
Pass-through taxation: Setting up an LLC offers you greater tax flexibility, because it is classified as a pass-through business entity. In particular, by operating an LLC, you can choose to pay taxes as a partnership, sole proprietorship, a C corporation, or even an S corporation. Moreover, you can avoid double taxation, which is the main advantage of an LLC over self-employed;
The ability to get compensation and withhold taxes during the year: This includes, for example, Medicare and Social Security taxes. The problem with self-employed people usually lies in the fact that they are subject to self-employment taxes in addition to the regular business income taxes. With an LLC, taxes are already deducted from your salary during the year. Besides, the wages you earn from the LLC are deductible expenses. It reduces your pass-through income even further and, at the same time, cuts the amount of taxes you pay as well.

Are There Online LLC Services That Can Help With Launching a Company?

If you take into account all the pros of setting up an LLC, you will undoubtedly want to realize this idea. Being self-employed is great, but it’s even better to benefit from it. That’s why opening an LLC would be a perfect way to do it. Furthermore, you do not need to do it yourself, as there are many affordable company formation services which will help you in the LLC formation process.

A professional service will put all its efforts to form your LLC as quickly as possible and, indeed, it will not cost you an arm and a leg. If you compare business formation websites with the option of hiring a lawyer, then you can see a huge difference, as the services of an attorney will be much more expensive. What’s more, some of the best LLC services can set up your company for free!

If I Hire an LLC Service, What Incorporation Services Can It Provide?

The range of offerings that each business formation service provides is quite rich. If you think that apart from online LLC formation you won’t get anything else, you are completely wrong. The services you can get for your startup are:

Free Operating Agreement;
Employer Identification Number (EIN);
Registered agent for your LLC (some companies provide this service free of charge for one year);
Personalized Organizational Meeting Minutes and Corporate Bylaws;
Website for LLC;
LLC business name check;
Useful business formation guide site;
Extensive Document Library Access, etc.

Bottom Line

To summarize, let’s answer the main questions:

Do you want to have an opportunity to choose the type of taxation for your business?
Would you like extra protection for your personal assets?
Are you looking for an affordable way to start your own business?

If you have one single answer to these questions and it is positive, then forming an LLC is a smart business decision for you. In addition, for a cheap LLC formation, you will definitely need an LLC incorporation service to make everything efficient and in accordance with the law.

Do I need to form an LLC if self-employed?