Protect
Your Personal Assets
The primary reason many businesses form
corporations or LLCs is to protect their
personal assets. Without setting up a
legal entity for your business, your personal
liability for business debt is unlimited.
This means that creditors can use your
personal assets such as your home or retirement
savings to satisfy your business debt.
Forming a corporation or LLC for your
business can protect your personal assets.
Save Money
on Taxes
If you are operating as a sole proprietor,
you are required to pay self-employment
tax on your profit. If you form a corporation
for your business, only the salary you
pay yourself is subject to self-employment
tax. With an S-Corporation, the remainder
of the profit is not subject to self employment
tax, which in turn saves you money. Another
tax benefit of forming a corporation is
that certain medical and childcare costs
may be tax deductible, which cannot be
deducted as a sole practitioner.
Look and
Feel Professional
Putting “Inc.” or “LLC”
after your business name can give you
credibility with your customers. Such
business forms can be a sign of credibility,
professionalism and trust.
Unique
Benefits of a Limited Liability Company
A Limited Liability Company, or LLC, has
the advantage of being a hybrid between
a Partnership and a Corporation. It is
recognized as a separate legal entity
from its members and thus shields its
members from individual liability like
a corporation. An LLC also provides “pass-through”
taxation like a partnership, allowing
the entity to be taxed only once instead
of once at the corporate level and then
again at the employee level. Finally Arizona
requires fewer formalities in the formation
and operation of an LLC.
The information you obtain at this website is not, nor is it intended to be, legal advice.
You should consult an attorney for individual advice regarding your own situation.
