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The potential advantages of an LLC

On Behalf of | Dec 23, 2022 | Business Law |

As a business owner, you’re always going to be tasked with making big decisions. If you started on your own for the purpose of making some extra money on the side, then you may have gotten by with a sole proprietorship. This would have allowed you to get set up quickly, and even use your personal finances to trade. Nonetheless, there are potential drawbacks to this, namely that you leave yourself exposed to liability.

If your company has expanded, then it’s important to consider different structures. One structure that may be of benefit to you is a Limited Liability Company (LLC). Outlined below are some of the key advantages of this structure.

Separating your business and personal liabilities

As stated, with a sole proprietorship, you are personally liable if anything goes wrong. For instance, if you end up in debt, then creditors may come after your personal possessions. An LLC allows you to create some distance between your business and personal accounts. This way, in the unfortunate event that commerce takes a downward turn, your personal assets have some protection.

Bringing in investors

An LLC can also make you more attractive to potential investors. With this structure, you can split the profits of the company in an equitable manner. For example, someone who has invested a large amount in the company can receive a larger share of the profit while smaller investors receive proportionate amounts.

There are numerous structures that your company can take and it can feel overwhelming when trying to decide. Seeking legal guidance as you go through this process will help put your mind at ease.