Despite The Type Of Business You Run It Is Vital To Protect Your Assets
With the economy in its present financial turmoil and people searching for necessary financial stability it doesn’t seem shocking to witness individuals starting their own small business. Many businesses typically fall under one of three particular categories; LLC, sole proprietorship or Corporation. Determining which is best for you is one of your first steps.
Sole Ownership
In the simplest terms, this means that one individual has total ownership of the company. You will find that when it comes to you and your company, there is no distinction between the two. As a result this means that you are solely responsible for any finances, in addition to the risks and benefits of the company.
Easy to set up, sole proprietorships can be run under your name or as a DBA – doing business as – which allows you to chose a name for the company for the purposes of bank accounts and the like. Compared to the corporate taxes, you only pay self employment tax, and have the barest of paperwork to file.
On the down side, you may experience difficulty raising capital and you are fully responsible for any debts the business accrues. Yet as your business raises in success, you should think about changing to either an LLC or even Corporation.
Limited Liability Company – LLC
This kind of business is a mix of a partnership component and corporate structure. More flexible in nature than a corporation, it is ideal for a small, or one person business. You get to opt how you pay taxes, avoiding dividend taxes and double taxation. You also get protection as an individual from any debt the business accumulates, and there is less paperwork involved than you find with corporations.
Because LLCs are still relatively new, many creditors will require you, the person, to back up any loans made to the business. This means that you lose the benefit of creating a company to protect yourself from debts. Some states consider LLCs taxable, again, reducing the benefits of pass through taxation usually associated with this legal status, making subject to double taxation. Renewal fees are often higher than those charged Sole proprietorships. Investigate the laws regarding LLCs in your state before you go with this option.
S-Corp for Small Business
A corporation is a legal entity in and of itself. It has both privileges and liabilities that are completely separate from its members. There are many different types of corporations, but for small business owners, S-Corps are the most common corporation for a small venture that involves several people.
An S-Corp doesn’t pay taxes on its income. The corporation’s profits and losses are passed down to its shareholders and they must report their earnings on their annual taxes. This provides a level of liability protection to the owners and members from creditors.Â
Like other corporations you will need to have stock, file certain paperwork and run regular meetings and officer elections.
Protecting your Assets
No matter what kind of business you run, or which legal status you choose, being able to protect your assets is important. If you end up spending any time meeting clients, traveling or interacting with people you don’t know, you need to watch out for your self defense.
A stun gun is an ideal non-lethal option. Do you know where you will find the best place to buy stun gun? Online. Take a look at the options and select a weapon you feel comfortable with. You will be able to go anywhere with confidence.