One of the earliest decisions you have to make about your business is what type of structure you’re going to use. If you need to divide your personal assets from the business’ assets, you might need to look into a limited liability company, which is usually referred to as an LLC.
When you establish your business as an LLC, people who sue your company or who want to make a claim against it can’t touch your personal assets. Instead, they would be limited only to the assets that the business holds. This reduces your personal liability if the business doesn’t succeed.
You can form an LLC as a single owner. This enables you to retain the tax benefits of a sole proprietorship while you still have the personal liability protection. You’ll still include your company’s profits on your personal income taxes, which could be a lower rate than what would be charged if you had to file the business’ taxes as a business. You can also carry the business losses on your own income taxes, which may offset some of your other income.
There are many other things to consider when you’re going to establish your company as an LLC. You do need to file paperwork with the appropriate authorities in California. This includes obtaining all required licenses, getting your employer identification number and filing the articles of organization. Working with someone familiar with this process is beneficial so that you don’t waste time trying to correct errors that you made while you were trying to handle everything on your own.