LLCs provide limited liability protection, and have tax benefits (and burdens) different than corporations.
Claims against an LLC’s business can only be enforced against the LLCs assets, and NOT against your personal assets. Your business liability is therefore limited to the business itself. The limited liability aspect of an LLC is a practical requirement for any business owner, since owners can be held liable for the actions of their partners or staff.
LLCs are treated like a partnership or sole proprietor business for tax purposes. That creates some tax benefits, as well as some tax burdens. LLCs make the most sense when investing in real estate with multiple owners or when the real estate is rented to third parties. You can compare tax effects at my Corporation vs. Partnership and Corporation vs. LLC pages.
Proper post-formation setup and observing the required corporate formalities are also essential – see my Legal Guides Startup Checklist: One Person LLCs and Startup Checklist: Partnership and Multi-Member LLCs for details.
Note: professional LLCs not available to licensed professionals in California (other than multi-person legal, accounting and engineering practices).
LLC formation is available at an all-inclusive flat rate: filing fees, legal consultations, name availability, Articles, regulatory filings, Federal and State tax ID Numbers (as applicable), online or over-the-counter filing, and all other expenses are included. Rush filing available for additional fee. LLC dissolution is also available at a flat rate.
If you are considering forming an LLC, contact me for a free 30-minute consultation to get started on the LLC formation process!