Doing business online involves much more than offering a great product or service that benefits others. Running a successful business also includes concepts like maximizing profits and minimizing expenses and liabilities.
Two good ways you can do just that are to do business as a corporation or a limited liability company. Doing so may help you:
Reduce Personal Liability — these entities can shield you from liability for business debt or lawsuits against your business. They can also protect personal assets such as your home, cars, and savings.
Reduce Taxes — these entities allow you to deduct expenses that a sole-proprietorship or partnership many not allow you to do. This includes healthcare, entertainment and travel expenses.
Maximize Retirement and Pension Plans– these plans can be grown more effectively and maximized faster using these entities. Additional tax benefits are also available.
Add Credibility to Your Business– these entities show that you’re serious about your business which is now registered in your state. Factors like credibility, prestige and permanence are all byproducts of doing business as an entity.
Raise Money and Build Credit– these entities allow you more options to raise money through the sale of stock or transfer ownership via the transfer or sale of stock. You’ll also be able to establish and build a new credit profile distinct from your personal situation.
Manage Your Company– these entities allow you to use agreements that define how you will run your company and resolve disputes. Laws also control what you and other people involved in your business can and should do to run the business each day. This protects everyone involved.
Note- all 50 States now recognize the single person LLC which is taxed the same as a sole-proprietorship (no double taxation) but still retains the liability protection and permanence of a separate entity. In California, this is one of my favorite solutions for small business owners. Please check with a lawyer in your state for help or if you have questions. Thanks!
Mitch Jackson is the founder and Senior Partner of Jackson & Wilson, Inc., and an award winning 2009 Orange County Trial Lawyer of the Year and 2013 California Litigation Lawyer of the Year. He enjoys applying his 35 years of practicing law to add value to consumers and clients who are doing the digital dance at the intersection of law, business and technology. Mitch is also the co-founder of ManeuVR, a Metaverse and Web3 consulting agency.