A limited liability company, or LLC, can be ideal for Texas small business owners who want to protect their assets without forming a corporation. Assuming that you don’t elect to change your LLC’s tax status, it will be treated like a sole proprietorship or a partnership.
Creating an LLC can help your business stand out
Having the words limited liability company at the end of your organization’s name may make it sound more sophisticated to clients or customers. This is because registering your business with the state makes it seem more like a legitimate company as opposed to someone offering their expertise on the side.
There are multiple potential tax benefits to creating an LLC
The first significant tax benefit is that you can avoid double taxation on the income that your business generates. With an LLC, the money passes through to your individual tax return without being taxed at the corporate level. Therefore, you don’t have to file a corporate tax return, which is another potential benefit to using the LLC structure. Instead, you will file your business taxes using either a Schedule C or a Schedule E.
It may be possible to avoid double taxation by creating a small business corporation. However, it generally takes more time and costs more money to create this type of entity compared to an LLC. Furthermore, there may be ongoing filing and compliance issues that you don’t have to deal with when creating an LLC.
Forming a company may be easier with the assistance of a business law attorney. Legal counsel may be able to help you choose a structure that best meets your organization’s needs. In general, small business owners will find that the LLC structure offers an ideal combination of asset protection and operational efficiency.
