When you want to set up an LLC, you have to consider all the costs that come with it. You have to pay fees when filing with the state, as well as fees for annual reporting and renewing your LLC. It may seem daunting and you may feel like you will have a lot more expenses than usual, an LLC can actually save you money. Here are a few reasons as to how an LLC can save you money.
In some states such as in Illinois, the taxes to pay are actually cheaper, since you only pay 1.5% of the net worth. You also have pass-through taxes, which means that there’s no need to file a corporate tax return. All you have to do is as a business owner, report your profits and loss annually as an individual tax return.
In some states you have to pay for franchise tax and the federal state taxes are all dependent on which state you have formed your LLC in. However, they are generally flexible in comparison to corporate tax returns.
Hiring a registered agent
Although it may seem like it’ll cost more hiring a registered agent, it is actually cost effective. Because they will handle all the legal paperwork for you and keep your annual filing on track for you. You can get basic scale plans with a registered agent, so that you don’t have to pay for a premium package. Even though you can be a self registered agent and it may seem cheaper, you would end up paying more fees and losing precious time as you would be held responsible for all tasks for legal paperwork and taxes.
Not only that, but your reputation would be protected from any lawsuits, which is handled from registered agents that you have hired. This can also benefit you when having an LLC, because it can reduce the costs when it comes to facing lawsuits for your company. You as a business owner would not be affected
Separating your assets
Getting an LLC can save you money in the long run because you would have to obtain an EIN. With an EIN, you have the chance to open a business bank account which also allows you to have a business credit card. This is separate from your personal assets, which is an advantage for you since you get to maintain your costs of your business and save any money when needed.
Are there any downfalls?
Whilst there are alot of benefits applying for an LLC, there are some cons too. You do have to pay for state fees and this can vary between $40 to $500, depending on the state that you are applying in. There may be additional fees such as reserving your name, but again this is all down to the state that you’re applying in. However, this is what you have to face as a business; even though there are ways of saving money and beneficial factors when getting an LLC, you cannot avoid all costs that need to be made.
Getting an LLC can help you as a business owner in many ways and there are so many pros for it.It can reduce your taxes, provide you professional help at a low cost and save you from losing all your personal assets. Just like every other factor when setting up a business, there are fees that you would have to pay for in order to set things up successfully. However, there are benefits along the process of setting up an LLC, such as getting professional help with brainstorming a business name by using a free name generator. Another advantage is that you can set up the LLC by yourself, meaning that you don’t need to hire a professional to do it for you and that is just another way of saving money.