When it comes to organizing your business in the United States, an LLC is quite possibly the best way to do it. Partly because it is so popular, an LLC can propel your business into unimaginable heights.

An LLC stands for Limited Liability Company. Many have found this way of organization to be the right one for their business. To explain to you why that’s the case, we will go into it a bit deeper.

We will explain to your the advantages of an LLC and why every US business needs one.

So, without wasting too much of your time, let’s start.

What is an LLC?

An LLC is much different than a corporation because of several factors. For starters, the shareholders are called members, and each member is protected in the case of a lawsuit. This protection is mainly because of the structure of the business organization.

To further clarify, an LLC protects each member in the case of business debt. Another notable thing is that the businesses are taxed the same way as a partnership.

So these two factors greatly impact how this business structure runs. In the United States, an LLC is a type of business organization that the state allows. Meaning this is always an option when forming a business structure.

Apart from LLC, other forms of business organization include Sole Proprietorship, General Partnership, Limited Partnership, and Corporation.

Each one comes with its own set of pros and cons, but we won’t get into that. For now, let’s talk about why every US business needs an LLC.

Why Every US Business Needs an LLC

This is a very good question to ask, especially when you consider the various considerations that come into play. Whenever thinking about organizing your business, lots of terms get thrown around. Stuff such as taxation, costs of registry, personal liability, management &ownership costs, etc, are all there to confuse you.

But, it’s important to understand what an LLC offers your business when put everything into context. Let’s talk about why every US business needs an LLC.

Limiting Personal Liability (Protection)

This is quite possibly the single biggest reason why an LLC is so popular in the United States. When a business is structured as an LLC, the members’ personal assets are protected in the case of business debt.

The only assets that are taken into consideration are the assets of the business. That means that creditors and lawsuits against the business won’t touch the assets of the members. Only the assets of the business can be taken to satisfy a business debt or a lawsuit.

Protection in the case of debt or a lawsuit is why many choose to form LLCs.

Raising Capital From Investors

When discussing ways for a business to raise capital, an LLC can simply bring in new members. These new members all contribute funds, services, and even property to the business. An LLC makes it possible to easily raise capital by simply introducing new people to the business. It is a finance savvy move that is a low-risk high-reward.

Tax Advantages

Yet another reason why every US business should structure as an LLC is down to the various tax advantages. Namely, a corporation pays more in tax as it falls into a separate tax group. That’s not the case with an LLC. But like a partnership, the profits or losses that the LLC experiences are distributed differently onto the members.

To counter that argument, every state in the US has different fees associated with LLCs, corporations, and partnerships. You should see what the fees and taxes for an LLC are in your home state before structuring.

Management Flexibility

The great thing about an LLC is that it comes with a higher degree of management flexibility. Such businesses can be run by either the members or an external manager.

The pros to the former are that all members can share the day to day operations. The pros to the latter are that the members can hire someone to manage the business. There are obvious sub-pros to this, namely if the members don’t have the particular experience to run the business.

Regardless of how you look at it, an LLC gives you more options in terms of management than any other type of business.

Easy Startup and Upkeep

Yet another financial benefit is down to the fact that it’s very easy to start an LLC. The costs are relatively light and so is the upkeep. Although each US state charges different fees and taxes, the startup process is relatively simple. All you need to do to start an LLC is to file an article for the organization. As you might imagine, each state charges differently for such an article.

For example, Arizona has a $50 fee while Illinois has a $500 charging fee! But with all that said, simply hiring a lawyer or an accountant will get you over the line and help successfully establish an LLC.

How to Start an LLC?

And lastly, we will give you a quick tip on how to start one.

  • Choose a Name

Every business needs a name, just make sure it’s unique and doesn’t already exist.

  • Choose a Registered Agent

This will be a person who will be in charge of official correspondence for the LLC.

  • File an Article for Organization

This is the official document that puts the LLC into action. You will need to provide information such as name, place of business, type of management, and other things that you have already stated in the business plan.

  • Get an EIN (employer identification number)

This is a unique identification number for the LLC. The purpose of this number is to serve as the official IRS number relating to taxation.

  • Draw up an Operating Agreement

This agreement includes stuff such as members, management structure, ownership breakdown, voting rights, duties, powers, and managers. It also accounts for how profits are distributed among members.

  • Establish a Business Account

An official business checking account that separates business from personal affairs. It’s smart to have one as it puts a clear line between both worlds.

Finishing Thoughts

These were some of the reasons why every US business needs an LLC. While we also gave you a general rundown of how to start an LLC, you might want to read more in-depth about it.