The Two Giant Problems a Limited Liability Company Fixes
If you're here just looking for information about how you can get a free LLC formation kit for your state, go ahead and skip the next few paragraphs. You want to jump down to the heading labeled, "The Secret Code You Need to Get a Free Kit."
If you're still during your research, however, let me give you a bit of background about the two big problems of operating an unincorporated business like a sole proprietorship or general partnership.
Dangers of sole proprietorships and partnerships
The first problem: You are legally liable for the all the debts of the business. In other words, no matter what happens, in some cases no matter who is at fault, no matter what the amount, you are liable.
In a worst-case scenario, you could lose almost everything you have.
But that's not the only problem with operating a business as a sole proprietorship or partnership. In addition to the income taxes you pay on your business income, you also pay a second heavy tax on all your business profits, the self-employment tax.
Many small business owners, in fact, pay more in self-employment taxes than they pay in federal income taxes.
That's the bad news, so to speak.
Advantages of forming a limited liability company
Fortunately, you also have some good news. You can often fix both problems easily, quickly, and inexpensively.
How? First, you can setup a limited liability company and use it to run your business. This largely solves the unlimited liability problem. A limited liability company means you aren't liable for the debts and obligations of the business merely because you own some or all of the business.
Second, you can use a quirk of tax law to select how your LLC is taxed. But let me explain.
A limited liability company lets its owners select the tax treatment they want for their business. For example, an llc with a single owner can be a sole proprietorship or a C corporation or an S corporation. And one with multiple owners can be a partnership, a C corporation or S corporation.
This tax flexibility means you can pick the tax treatment that saves you the most taxes. An S corporation, for example, can save a small business thousands of dollars a year in self-employment taxes. And a C corporation, as another example, can allow small business owners to pay generous tax-free fringe benefits to themselves which saves potentially thousands of dollars annually in income taxes.
So here's the bottom line: If you're starting a new business or if you operate an existing business, you must investigate the limited liability company option. You owe it to yourself. You owe it to your family.
The Secret Code You Need to Get a Free Kit
Okay, so historically, we sold the LLC formation kits that appear on the State LLC kit pages for $34.95 or $44.95. And the kits really were a good deal at that price. They include a short e-book that explains the setup process for a particular state and also include sample operating agreements.
But a while back, we decided to just start giving away the kits for free as a promotion. And to get a free kit, all you need the secret discount code. Here's that code:
Just to make this clear: Yes, the pages that describe the kits say the kits cost money. (We need to update the pages obviously.) But use the discount code and you get the kit for free.
If you want to reduce your business risks and start saving taxes, therefore, go ahead. Click the do-it-yourself kit link for your state (see list of links along left edge of this web page) and download a free do-it-yourself LLC formation kit.
You can even download multiple kits, if you want, and so grab kits for several states. However, know that almost always you want to set up a limited liablity entity in the state where your business operates or if you're an investor in the state where your investment is located.
Tip: Still need to do a bit more research before you pull the trigger? Be sure to check out my giant FAQ.