What is an LLC? Learn The Benefits of Starting an LLC

What is an LLC? Learn The Benefits of Starting an LLC

In this article you will learn in depth about LLC and some of the key benefits of registering as an LLC for aspiring entrepreneurs.

When starting a business, there are a lot of different factors to consider. One of the most important foundations for your business will be the type of company you decide to operate. Which works best for your situation: a corporation, a sole proprietorship, a partnership?

An LLC is what many entrepreneurs register their company as, and for good reason. Here are some of the key benefits of registering as an LLC for aspiring entrepreneurs.

1. An LLC is easy to start

The best part of an LLC is that despite all the challenges entrepreneurs face when starting and operating a business is that it’s easy to start, whether you’re starting a Texas LLC, a Maine LLC or anything in between. To get started, all you need is a business name, address, names of the business members, and a registered agent. With this information, you can file a certificate of formation with your secretary of state, and voila! You’ve got a business.

The ease of starting LLC results in another perk: registering your business won’t cost you all of your savings. You can have experts assist with filing the necessary paperwork for a nominal fee so that you can direct your funds to growth and development.

2. What’s a registered agent?

The aspect of starting an LLC that confuses many new entrepreneurs is the idea of a registered agent. While the title has weight behind it, it’s not as intimidating as it sounds. A registered agent is a person or organization that has a mailing address where documentation can be sent.

3. An LLC is easy to run

There are very few rules and regulations surrounding the operational requirements of an LLC. This is what sets an LLC apart from corporations. With corporations, there are certain formalities to be adhered to, such as filing annual reports and appointing a board. Ownership is shared among shareholders and taxation is a bit more complex. With an LLC, there’s no requirement for a board or annual general meetings. Taxes are filed in conjunction with the personal taxes of the owner, which prevents double taxation.

If you need to make changes to your LLC in the future, the process is relatively simple. Yes, there will be paperwork, but you can easily submit it and have the changes made without approval from other shareholders and investors.

4. Limited liability

A Limited Liability Corporation does as the name infers - it protects an owner from liability and creates a separate entity for the business. In many other ways, it acts the same as a sole proprietorship. This layer of protection ensures that debts incurred through your business or any liabilities that arise cannot carry over into your personal assets.

An LLC is essentially a hybrid between a corporation and a sole proprietorship, capturing the benefits of each type of business in a way that benefits small and medium-sized business owners. This is why the LLC is such a popular choice for entrepreneurs.

5. Simplified taxes

As previously mentioned, taxes are filed in conjunction with an LLC owner’s personal tax return. That means that the profit and loss statement and any business expenses incurred are entered in a streamlined way without having to file separate returns. This approach is especially beneficial for those who run home-based businesses and wish to receive tax credits for their mortgage or rent, phone and internet bill, and electric bill.

One of my friends from Taxfyle said, "Despite the fact that the approach to filing one’s taxes is relatively simple, it’s always best to outsource to an expert to file your taxes. This will help ensure that you’re getting every claim you can and that no costly errors are made. The best part about outsourcing? You can claim it as a business expense!"

6. Tax season pro tip

Whether you choose to outsource your taxes or not, it’s best practice for LLC owners to maintain accurate records throughout the year rather than trying to figure it all out at once. Keep your documentation sorted and filed by month, and use either an Excel spreadsheet or specific software to document all of your receipts, mileage, etc. as the year goes on.

7. Exceptions to the Rule

While starting an LLC is the right choice for a large portion of entrepreneurs, it’s not right for everybody. As the LLC business format doesn’t carry over into certain countries - Canada, for example - it’s important to assess whether or not you plan on doing business internationally. If so, reconsider your approach to forming a business.

Another exception is for those who are starting a business with a lot of investors. Then a c-corporation or s-corporation would be a better option. The best way to decide which of the two would work better for you is to discuss with your fellow business partners and weigh the pros and cons.


If you’re thinking of starting a business, an LLC is a great way to get started. In the future, as you diversify your portfolio and look at other opportunities, you may decide to evolve into a different structure. However, an LLC is a smart starting point for aspiring entrepreneurs.

Sam Makad is a business consultant. He helps small & medium enterprises to grow their businesses and overall ROI. You can follow Sam on Twitter, Facebook, and Linkedin.

3 Essential Components of Successful Marketing Campaigns

Many companies believe that successful marketing is a short-lived,...

3 mins read

29 Best Website & SEO Audit Tools That Every Marketer Should Use [Updated]

In this fast-paced digital world, there is tremendous pressure...

10 mins read

5 Affiliate Marketing Tactics That Will Improve Your Sales Strategy

Affiliate marketing can significantly increase sales for retailers and...

2 mins read