Why And How You Can Protect Yourself And Your Assets

Why And How You Can Protect Yourself And Your Assets

Posted on 21. Jan, 2013 by in Archived Post

If you are starting to make money online, or you’re looking to start a legitimate business on the web, you’re going to have to eventually look into taxes. I’m not a financial expert, but know enough to discuss how forming an LLC can help you. This will not be an overly technical discussion, but a rather simple and straight forward layout of how it can benefit you. So let’s get to the point….taxes favor real businesses, and if you don’t feel like you’re a “real business”, you might get a letter from your city asking you to start registering as one in order to collect taxes. And it would be in your best interest to avoid getting that letter. There’s only a few things in life that you can guarantee you will have to deal with, and that’s death as well as taxes…..how exciting, huh.  The old adage is alive and well today, which is why many are looking into creating an LLC for business. Consider the many benefits of this step before you start to make a serious passive income.

Asset Protection – The first reason why you would want to start a Limited Liability Company (LLC) is because it will allow you to protect you finances. That means when the business gets into debt, or there are issues with the services rendered, your personal money can be protected and left unscathed. If you don’t have a separation of income through the formation of this type of business entity, all your finances are treated the same, so if you are sued, you can lose all your money, even that which is not part of your “business”. An LLC helps to protect against that, leaving your personal finances alone in case of suit.

Authority in the Marketplace – When you are dealing with clients or talking to other businesses, you can look like an authority in your field (eventually you will be an authority). You will no longer be looked at as a freelancer, or a hobbyist, you’ll be presenting your ideas as a business and that speaks volumes to others. There is also an inherent trust that is created between consumers and businesses when they see that an LLC is formed instead of just a solitary name. Perception can play a major role in your business dealings. Your ultimate goal is to bring perception and reality as close as possible.

Taxes – You will find that taxes are easy to deal with, because financial profit or loss is passed through and reported through personal income tax returns rather than other methods. The business tax level is left out in this structure.

One Owner or Many Owners – Another great benefit to creating an LLC for business is that you can run it all on your own, as a sole owner or you can bring on board several shared owners which can make for a flexible structure of management and property. This is far less strict than other options, such as an S Corporation.

The above advantages are just some of the many benefits that people have seen with forming a full business rather than just going at making money online without formal paperwork filings. You’ll find that it’s a great way to showcase to others that you’re serious about what you do. The cost of doing business as an LLC varies from state to state, but often times it’s an easy process that doesn’t require full legal representation to get going. When in doubt, refer to your state and local official websites to get fully integrated into the world of business through the formation of a Limited Liability Company. Or you can visit LegalZoom.com. When I began my entrepreneurial endeavors, I chose LegalZoom based on the reputation and found them to be a good fit for my business needs. I ordered one of the packages, they delivered the material, and I was in business. The process was very simple and I believe LegalZoom can help those that don’t have the time to research and file the proper paperwork needed to legally start a business in their state. I’m not an affiliate of LegalZoom….just speaking from experience.

Next Step:  Take the time to research the type of business you should start (LLC, S Corporation, etc.) and then visit www.legalzoom.com or your state’s website and begin the process of legally starting your business.

 

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15 Responses to “Why And How You Can Protect Yourself And Your Assets”

  1. VahnCross

    13. Jun, 2013

    Actually, in my experience as an online earner, I have little problem with taxes too. Because when you’re earning as a freelancer by writing or other similar methods, the least of your worries is tax. That’s because your pay or commission isn’t deducted by taxes and you get to enjoy your pay fully. ^_^

    Reply to this comment
    • Liberty

      19. Jun, 2013

      As a freelancer, if you make a certain amount of money, don’t you still have to pay in taxes, though? I know that Elance requires W-9s for this reason.

      Reply to this comment
      • Big Dave

        Big Dave

        19. Jun, 2013

        I’m certain you do….just not sure how much, though.

        Reply to this comment
        • Liberty

          27. Jun, 2013

          Do you think it’s necessary to become an LLC if you’re simply freelancing?

          Reply to this comment
  2. James

    24. Jun, 2013

    At what point do you think it is wise to take the steps to becoming a LLC? Is there a dollar range?

    Reply to this comment
    • Big Dave

      Big Dave

      24. Jun, 2013

      Not so much a dollar range, but at the point that you become involved in circumstances (i.e. selling online) that can expose you to a lawsuit and the LLC can provide some level of protection against that risk.

      Reply to this comment
  3. Sarah Harris

    07. Jul, 2013

    I never thought about the importance of presenting a business as an authority of the workplace. It makes a lot of sense to present a professional unified front.

    Have you ever had a situation when you were glad your business was a limited liability?

    Reply to this comment
    • Big Dave

      Big Dave

      09. Jul, 2013

      Hi Sarah,

      Thankfully, I have not been involved in a scenario in which I was glad that I had an LLC, but if the situation presents itself, we’re prepared.

      Reply to this comment
  4. John

    08. Jul, 2013

    It makes proper financial sense too.

    Try getting a overdraft from your banker on you company account and you will begin to appreciate the value of company financial credibility.

    Having your company registered as a LLC and regular paying of taxes helps in building the financial books of the company along with credibility.

    Reply to this comment
  5. nomansalehzada

    14. Jul, 2013

    Dave you mentioned LLC protect one’s money , is that some kind of insurance?

    Reply to this comment
    • Big Dave

      Big Dave

      14. Jul, 2013

      In a way, it does as it adds a second layer of protection that shields your business against personal lawsuits.

      Reply to this comment
    • Hassnain

      21. Jul, 2013

      Yeah Noman, it’s similar to that

      Reply to this comment
  6. John

    26. Aug, 2013

    Thanks for the advice. When should someone consider filling as an LLC?

    Reply to this comment
  7. Charlotte

    26. Aug, 2013

    Is there any down side to incorporating yourself?

    Reply to this comment
  8. Zuri

    27. Aug, 2013

    Right now I am operating as a proprietor. I’m seriously going to look into moving to an LLC for all these reasons.

    Reply to this comment

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