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Selecting your business entity is a big deal. This is something that will serve you for years to come and will be a meaningful part of operations. Though most don’t think too deeply about the topic, they should. For small businesses or those just getting started, incorporating can be the best thing they do for themselves and their company. The process for incorporating isn’t as difficult as you might think of as expensive. It can be made exponentially easier with a formation company.
Where Your LLC is Formed Matters
You might be thinking of forming an LLC in your home state. However, this isn’t always the best option. Other states offer many more benefits than others. For example, New Mexico offers the benefits of protecting your identity. These are called anonymous LLCs. To take advantage of the anonymous LLC, you have a company or law firm file on your behalf. They will use their mailing address as opposed to yours, and your vital information will not be shared. This is great for those that don’t want their home address, name, and phone number available to the public. Protecting your identity is crucial for a number of reasons. This can include asset protection, preventing family issues, and much more.
It Provides Asset Protection
As a small business, you have a lot at stake. Should something happen and you don’t have enough insurance to cover it, you may have to forgo your personal assets to cover. When you incorporate into an LLC, your personal assets are pretty much off the table when it comes to lawsuits. Should someone sue the business, you would only be required to sell off the business assets to compensate for their loss versus your own.
Better Tax Advantages
Those that have an LLC can also receive some tax advantages over not. In New Mexico, limited liability companies have flexible taxation that other entities do not. They are taxed as a pass-through entity, which means they’re not subject to double taxation. Essentially, this means that your company’s earnings will flow to your personal income statement.
When it’s time to file at the end of the year, you’ll do so on your personal taxes and not separately. One issue individuals may see is the claim that you won’t have to pay state taxes because certain states don’t have This method of tax collection. Just because you file articles of organization and states like Wyoming or Nevada doesn’t mean you get to take advantage of the no state taxes. Where you live determines your tax rate. This is often a misconception for many and one that’s confusing among companies that sell formation services.
Gives Your Company A Professional Look
Lastly, having an LLC will send a clear signal to potential customers. An LLC at the end of your business name adds certain professionalism that most take notice of. It is an extra step, extra fees, and it implies you are serious about your business and what you do.
Is An LLC Right For You?
Becoming a limited liability company is an awesome choice for any business. It provides the asset protection needed to secure peace of mind. It also offers better tax advantages, and when done in states like New Mexico, you can opt for anonymous LLC filing. If you’re still unsure if this is right for you, there are resources available. If you’d like to learn more about LLC formation or would like to establish your New Mexico LLC now, visit Cindy’s New Mexico LLC Formation Service online today.