In one my previous posts I talked about what a Limited Liability Company (LLC) is. I shortly touched on the advantages that an LLC offers for an entrepreneur. In this post I will examine the advantages of a Limited Liability Company for particularly an Internet Entrepreneur.
Limited Liability Companies are the most popular form of business structure chosen by internet entrepreneurs. It would have to be an exceptional case to start an internet company around a website or service as something other than an LLC. However some companies might change their structure to a S-Corporation in order to be able to go public.
Limited Liability
The LLC provides limited liability for its members meaning that the owner’s (member’s) assets outside the company are protected given that the company goes bankrupt, gets sued, or is in debt.
Pass-Through Taxation
When working for a large company (ex. formed as a C Corp) as an employee, you almost always pay taxes on your income. Your employer also pays tax on the companies earning. This is called double taxation. In an LLC you can file all your income taxes through the company on the same tax forms as your personal tax and you only have to count that income once.
So LLC protects you from being double taxed.
Simple Record Keeping
We, webmasters, tend not to keep any records – especially in hard copy format. In an LLC, unlike C Corps, you don’t need to hold annual meetings, and publish many reports. However, you do need to keep enough records to fill your tax forms and be able to defend them later.
Deductibles Expenses
At the end of each year you have to deduct your expenses from your earnings and pay taxes on them. You can deduct your own salary, and business expenses. Since you would be the owner you might be able to deduct your work related travel expenses (Blog Expo trip), cell phone bills (if you use it to give support), etc from your earning.
Tags: Entrepreneur, Internet Entrepreneur, LLC
