As an aspiring business owner in South Carolina, you must start by deciding what form of business organization works best for your needs. While many people consider sole proprietorships at first, an LLC is likely going to be your best bet.
It is important to understand each option before you make your decision, though. Going through the pros and cons allows you to see which one truly works for you.
Personal liability protection
Entrepreneur discusses the benefits of an LLC. First, LLCs provide you with personal financial protection. It allows you to separate your business and personal assets. If your business ends up in hot financial water, your personal finances and assets do not get dragged into it. In other words, you can file for bankruptcy for an LLC without risking your personal savings, home, car and so on.
LLCs have a less strict format
On top of that, LLCs deal with much less paperwork than corporations. The structure is looser and more suited to individuals who want some wiggle room to experiment. Corporations often have strict rules and guidelines they must follow. This covers everything from tax information submission to annual meetings with shareholders. LLCs allow you to avoid this.
If you are a sole business owner, your LLC is still taxed as a sole proprietorship too. This allows you to keep many useful benefits, like distribution for profit taxed at your personal tax bracket. You can also enjoy a pass-through of business losses, which offset your nonbusiness income.
In the end, LLCs are not right for everyone. But they provide a lot of benefits and you may find yourself benefiting, too.