What Is A Limited Liability Company (LLC)?
A limited liability company (LLC) is a business structure in the U.S. that protects its owners from personal responsibility for its debts or liabilities. Limited liability companies are hybrid entities that combine the characteristics of a corporation with those of a partnership or sole proprietorship.
By starting an LLC for your business, you can:
Protect your savings, car, and house
Increase your peace of mind
Protect your privacy
Allow for greater profit
Allow for accelerated growth
What Are Some Examples of LLCs?
LLCs are more common than many realize. Alphabet, the parent company of Google, is an LLC, as are PepsiCo Inc., Exxon Mobil Corp., and Johnson & Johnson.6
There are many much smaller LLCs. There are variations that include sole proprietorship LLCs, family LLCs, and member-managed LLCs.
Many physicians’ groups are registered as LLCs. This helps protect the individual doctors from personal liability for medical malpractice awards.
So, if you want to start your hair salon business, form your LLC is the best way.
What Are LLC Advantages?
Personal Liability Protection. LLCs provide personal liability protection. This means your personal assets (car, house, bank account) are protected in the event your business is sued or if it defaults on a debt.
Tax Benefits. LLCs have options to customize their tax structure. This allows businesses to use the best tax strategy for their circumstances.
Growth Potential. LLCs can grow in profit and risk because they provide personal liability protection and tax benefits.
Credibility and Consumer Trust. LLCs generally earn more trust from both banks and consumers than do informal business structures like sole proprietorships. This can impact a business’s ability to take out loans and can affect marketability.
When to Form an LLC?
Becoming an LLC is the next step in growing your business and protecting your assets.
You should form an LLC when:
There is risk of liability
You need to scale your business
When you need to increase credibility
Converting an Existing Sole Proprietorship to LLC
If you are operating an existing business as a sole proprietorship, we strongly recommend forming an LLC to protect your personal assets.
There is a common misconception that when a sole proprietor registers a “doing business as” (DBA) name, they are forming a business entity. This is not the case — a DBA is only a registered business name.
You can change a sole proprietorship to an LLC by taking the same steps that any new LLC would need to take.
What’s LLC Cost?
The main cost of forming an LLC is the state filing fee, which ranges between $40 and $500, depending on your state.
How To Form Your LLC?
You can hire a professional LLC formation service to set up your LLC (for an additional small fee).
Or, you can use our free Form an LLC guide to do it yourself.
Six Basic Steps to Start an LLC
Step 1: Select a State
Step 2: Name Your LLC
Step 3: Choose a Registered Agent
Step 4: File the Articles of Organization
Step 5: Create an Operating Agreement
Step 6: Create or Transfer an EIN
If you’re a stylist who wants to start a hair and beauty salon, you’ve probably at least considered forming a limited liability company (LLC) for your business. The LLC is a popular option for all sorts of businesses looking for asset protection, and it has a handful of other major advantages as well. If you want to know more details, welcome to discuss with our Tedhair sellers, we are professional in hair business.