Do You Need a LLC for Your Business?

One of the most commonly asked questions business owners have when they start a company is whether they need a LLC. A LLC is a very popular business entity because formation is relatively simple and running an LLC requires fewer formalities, meaning that you can run an LLC the way that you like.

What is a LLC?

LLC stands for limited liability company. An LLC is a type of business entity. Another type of business entity is a corporation. LLCs and corporations are considered separate legal persons.

What are the Advantages of Creating a LLC?

Personal Protection

When you create a business entity, you are personally protected if something goes wrong in your business. Let’s say someone sues your business and they win the lawsuit against you, everything you’ve worked so hard for will be protected. This includes your house, your cars, your bank accounts, your investment accounts, and all other valuable assets that you personally own.

Business Protection

Not only are you personally protected when you create a LLC, your business will also be protected if someone sues you in your personal capacity. Let’s say you have an unforeseen medical expense, which you are now unable to pay off. The creditor sues you to pay the debt. Because the debt is in your name and not in the name of your business, the creditor cannot satisfy your personal debts with your business assets.

Easy to Create and Maintain

Creating and maintaining a LLC requires less work than incorporating and maintaining a corporation. A corporation must follow certain corporate formalities to maintain its corporate status, such as having a board of directors, holding annual meetings, maintaining meeting minutes, and drafting board resolutions to record decisions made by the board. Most small businesses are not good at doing this and may not get the protection that they are looking for in creating a corporation.

Despite the LLC’s lack of formalities, however, you still have to run the LLC like a separate business to get the personal protection that most business owners seek when they create a LLC.

Is a LLC Right for You?

Despite the advantages of a LLC, it might not be the right type of business entity for you. Whether a LLC is right for you is based on your unique circumstances and the goals you have for your business.


If you have questions, we are here to help. You can schedule a free strategy session with us by clicking here.


This article is provided for informational purposes only and should not be construed as legal advice. Read our disclaimer here.

#formation #LLC #incorporation