Starting a business is an exciting and important decision, and one of the first things you should consider is how you want to structure your business. Two common options are a limited liability company (LLC) and a corporation. Here are a few reasons why a business owner might choose an LLC or corporation:

1. Liability protection: An LLC or corporation can provide liability protection by separating your personal assets from your business assets. This means that if your business is sued or incurs debt, your personal assets (such as your home, car, and savings) are not at risk. This can provide peace of mind and financial security for business owners, especially if you are starting a business that carries a high risk of liability.
2. Tax benefits: LLCs are taxed as a pass-through entity, which means that the business itself does not pay taxes on its profits. Instead, the profits are passed through to the owners (called members) and taxed at the individual level. This is known as “single taxation.” Corporations, on the other hand, are taxed as separate entities and may have the option to be taxed at a lower rate if they qualify as a small business corporation (S corporation). S corporations are taxed similarly to LLCs, with the profits being passed through to the owners and taxed at the individual level. This is known as “double taxation,” as the profits are taxed at both the corporate and individual levels.
3. Professionalism: Forming an LLC or corporation can establish your business as a professional, legitimate entity in the eyes of investors, clients, and partners. It can also make your business appear more credible and trustworthy to the general public.
4. Ability to sell ownership: If you want to sell ownership in your business to others in the future, forming an LLC or corporation can make the process easier. It can also help establish clear rules for how the business is owned and run, which can be especially important if you have multiple owners. This can include things like how decisions are made, how profits are distributed, and what happens if an owner wants to sell their share of the business.

Overall, it’s important to carefully consider your business goals and needs when deciding whether to form an LLC or corporation. It is equally important to consult with a lawyer to determine the best option for you.

The Attorneys at Rooks Law are here to help. If you are considering starting a new business or want to establish an entity for your current business, we are happy to help. Call us to find out how we can help give you the peace of mind of liability protection and the advantages discussed above.