Why are we starting a LLC?

Why are we starting an LLC?

Martin (our project sponsor) wants to start a business immediately: recently, we researched the benefits of deciding between a sole proprietorship or a limited liability company (LLC). After our initial findings, we decided to move forward with starting an LLC due to the personal liability that you take on in a sole proprietorship. In an LLC, a business owner can only lose their investment into the company, whereas in a sole proprietorship, personal assets are at stake if the liability cannot be covered by the business.

As for taxation, an LLC is assessed at a standard 21% business income tax level and then also taxes individual income through personal income tax. However, you also have the option to pass the income from the business through in the percentages it was earned in and then will not face this double taxation, so we’re recommending the company opt for the pass through tax option.