Why You Should Create an LLC for Your Business

An LLC is one of the most common forms of organization in the United States for small businesses. While there are many different positives and negatives to creating an LLC as opposed to a sole proprietorship, corporation, or partnership, I'm going to reflect on the positives that an LLC has to offer today. The main benefit of creating an LLC is that it creates a divide between the owner and the business operations, let's talk about it:

Once the LLC is set up, there are three main benefits of the separation between the owner and the business:

Benefit #1: Legal Limitation

When you create an LLC for your business and organize everything appropriately, the business becomes its own entity. The main benefit of this is that your customers can only sue for the assets of the business and not your personal assets. The United States is a particularly litigious country, and it is wise to limit the liability that you may face by doing business. By setting up an LLC, you effectively create a bubble around your exposure to risk. This protection assumes you are operating the business correctly and are not commingling personal and business assets, but for many people, that's a manageable task when the reward is so great.

Benefit #2: Personal Separation

when many people start off their side business, it is something they are passionate about doing it might even do for free. Those passionate people can sometimes have issues separating their business spending from personal spending. Creating an LLC and operating it like a business forces these passionate people to create a separate bank account and financial records for the business. By keeping everything separate, they can better analyze the cash flow and operations of the business independent of their personal activities. 

Benefit #3: Brand Separation

This might not be a benefit for everybody, but it's very important in many cases. Many people don't want to be the face of their business despite how involved they might be in it. They might care more about the brand and the message that the business creates or want to have the ability to create multiple businesses and not have them interfere with one another. While it is probably true that you are going to be the person driving your business forward, the ability to step into a brand that's been established through your separate entity is not one that should be understated. 

These benefits can apply to everyone, but everyone will realize them differently. Some people might only care about the legal shield, while others will desperately need the structure of a business to stay organized. If you are looking to start a business in the future, I encourage you to see through these perspectives while creating your business plan to see if an LLC is right for you.