One of the most difficult things to do as a business owner is to make a decision as to what type of entity you want to incorporate as. Setting up a limited liability company (LLC) is the go-to choice for many entrepreneurs. They appreciate how easy it is to set one up, how it provides them with built-in liability protection and the tax benefits it affords.
LLCs cannot be double taxed. Those who own other types of business entities such as C-Corps are often taxed in a personal capacity and as a corporation when it comes time to file in April of each year.
Another reason that business owners set up LLCs is to protect their personal assets from being seized if their business is sued. If you have a sole proprietorship, then you can be held personally liable for paying any damages a plaintiff wins in a lawsuit.
Choosing to incorporate yourself as an LLC affords you the necessary liability protection that you need when you first go into business. If you decide to acquire or merge with another company, then you may wish to convert your formation from an LLC to a C-Corp or an S-Corp.
Another benefit to setting up an LLC is that it is easy to manage. If an owner decides to sell part of their interest in the company or to add new partners, then it's relatively painless to do. This contrasts greatly with how a C-Corp works. With this type of entity, a board meeting must be called, and minutes are taken before any decisions can be made.
Before you set up an LLC, you'll need to think of a name for it and request an Employer ID Number (EIN) from the Internal Revenue Service (IRS). With both of those in hand, it's relatively quick, easy and inexpensive to register your LLC in Ohio.
An LLC isn't the right type of structure for every type of company. A business formation attorney can go over the different types of entities that exist and the pros and cons associated with each. That's why you should contact an Ohio attorney when starting a business. They can then help you decide which one may be most appropriate for the type of company that you're looking to operate here in Cincinnati.