Do you want to start a company but don’t know what business entity is best for your needs? There are many different types of company structures that provide various legal and tax benefits. One type of structure, the limited liability company (LLC), has become very popular in recent years because it offers an easy way to form a new business while also limiting personal liability. However, before you decide on an LLC, there are six factors that you should consider.

This post will talk about these six factors and how they can affect your decision when setting up an LLC. Check on the list below.

Do You Need Liability Protection For Your Company?

When setting up an LLC company, one of the first things to consider is whether you will need liability protection for your business. If it’s a corporation, then LLCs will not help very much with personal liability because shareholders in corporations have limited liability just as they do have an LLC company structure. However, if you form a sole proprietorship or partnership and do nothing else, you will be personally liable for all of the debts and obligations incurred by your business.

If you need liability protection, an LLC may not be right for you either because it does not protect members from any personal liabilities they would incur due to their own actions (e.g., contracting with someone to do work that results in injury or damage to another person). If you want an LLC company structure that provides maximum personal liability protection, it is best to form a limited partnership or corporation.

What Tax Implications Are There In An LLC Company?

An LLC company structure provides a great deal of flexibility when it comes to tax considerations. When you set up an LLC, you will choose to be treated as a corporation or partnership for tax purposes. This flexibility allows you to choose the type of taxation that is best for your company and gives you more options when it comes time to dissolve your business (e.g., distribution of assets).

If you decide to form an LLC, your operating agreement must specify whether your business will be taxed as a corporation or partnership. This decision can have significant tax implications for the company and its members, so it must be carefully considered before filing any official paperwork.

Does My Business Qualify for an LLC Company

Not all businesses are eligible to form an LLC. For instance, doctors and lawyers are prohibited from forming an LLC company structure because it may violate their licensing agreements with the state. Also excluded are businesses that have already formed another business type (e.g., corporation or limited partnership). To determine whether your business can form an LLC, you should consult with an attorney or tax professional.

If you can form an LLC, it is important to understand that your business will only qualify if all members are U.S citizens and residents (i.e., individuals). If any member does not meet this requirement, then the business cannot be formed as an LLC but may still use another business entity type.

Is It Worth It To Set Up An LLC Company With Another Person?

If you are thinking about setting up an LLC, it is important to consider whether or not sharing ownership with other people will be beneficial. This can depend on how much control each member will have over the company’s decisions and finances and what kind of plans they may have for their share in your business (e.g., selling it to someone else).

If you are thinking about sharing ownership with another person (or more than one other person), your LLC operating agreement must address these considerations. An attorney or business tax professional can advise you on best addressing the issues involved in splitting up an LLC company structure between two different people.

Difference Between Single-Member And Multi-Member LLC Companies

6 things to consider before you set up an LLC

A single-member LLC company is owned solely by one person, while the other option, a multiple-member LLC company, is owned jointly with two or more people. Because it has only one owner, an 80 percent ownership interest in a single-member LLC company qualifies as a “pass-through” entity under the Tax Cuts and Jobs Act of 2017.

This means that all profits from this type of business are only taxed once at the individual level, not both on the corporate side and again by each owner when distributed to them personally

Decide Whether You’re Going To Be Self-Employed Or Hire Employees

When you start a business, it is important to decide whether or not you want to hire employees. Setting up an LLC company for your business does not mean that you have to employ anyone else. Still, this option can be beneficial if your income from the LLC will increase over time and may eventually require additional personnel to meet demand.

If you choose to hire employees, you will need to provide them with worker’s compensation insurance coverage. You must also pay your state unemployment tax agency for each of your workers on a monthly or quarterly schedule, depending on the size of your company.

Setting up an LLC is a complicated process that includes many considerations. This article has given you six factors to consider before you make your decision, but there are plenty more for you to think about as well. You must always remember to consult with a professional when setting up an LLC company.