Do You Need an LLC to Work Naked?

I’ve been on the fence about converting my business to an LLC (Limited Liability Company). After reading the article “What You Should Know Before You LLC,” I think that’s the direction I’ll go. After all, the benefits are hard to ignore.

• With an LCC, your personal identity is separate from your business one, and creditors can’t get their hands on your homes, cars, and savings. This is a good way to protect your assets from creditors and lawsuits. Doing business by the book and by the law is another way to protect yourself from creditors and lawsuits.

• “In an LLC, the owner has liability protection against the acts of his employees,” says Morris Armstrong, a financial planner who owns his own business. You can’t fix (or guard against) stupid employees but if an employee makes a mistake, your personal assets are shielded.

• Of course, an LLC has its tax benefits. Sole owners and partners can have the company profits and losses pass directly through to their personal tax returns. With corporations, profits are double taxed. This benefit caught my attention. I’m not interested in paying more taxes.

The article makes a point that’s worth noting: If you’re a small business of one, your personal assets could still be at risk under an LLC.  You also can’t pay yourself wages.

What do you think? Is an LLC in your future?