What Makes Your Business an LLC?

Right now in the USA, there are approximately 21.6 million LLCs, representing around 42.9% of all small businesses in the country. This number has seen a consistent increase since 2005, with the IRS statistics showing a year-over-year increase that demonstrates just how valuable and appealing the LLC structure has become. Indeed, if you’re an entrepreneur starting a new business, forming an LLC is still one of the smartest structural decisions you can make. But what makes your business an LLC and what exactly are the benefits in 2025?

LLC: Explained

To understand what makes your business an LLC, it’s first important to understand exactly what LLC means. Standing for ‘Limited Liability Company’, an LLC is a specific legal business structure recognised in the US, combining limited liability protection with the operational flexibility and tax simplicity of a sole proprietorship or partnership. 

Essentially, if you want your personal finances to be separated from your business’s, meaning if your business faces lawsuits or debts, your personal assets are shielded – an LLC structure will provide the necessary protection, while also simplifying tax and offering flexibility in management. This doesn’t mean you’re completely protected, of course. You’ll still need LLC insurance to cover risks like property damage, legal claims, or professional errors, but the sLLC structure is a crucial foundation that can alleviate many of the usual business risks. 

What Makes Your Business an LLC

One of the best things about making your company an LLC is that the process is relatively simple. The first and most important step is filing the appropriate paperwork,  usually called ‘Articles of Organisation’, with your state’s Secretary of State office. 

Once approved, your business becomes officially recognised as an LLC, with your next steps being to designate a registered agent to receive legal documents on your behalf, create an operating agreement, outlining how your LLC will be managed and the roles of its members, obtain any necessary licences and permits, and applying for an Employer Identification Number (EIN) if you plan to hire employees. In terms of how you get approved in the first place, your Articles of Organisation must meet your state’s specific legal requirements. While these may vary, the common criteria include a unique business name, which should typically include ‘LLC’, a valid business purpose, and the timely filing of correct forms and payment of the required fees. 

The Benefits of Running an LLC

As we mentioned before, one of the key benefits of running an LLC is the protection it offers for limited liability. This means your personal assets, including your home, car, and savings, are generally protected if your business faces lawsuits or debts. Beyond that, an LLC also allows you to choose how your business is run and how you’re taxed, whether as a sole proprietor, partnership, or corporation, and it also requires less paperwork and fewer formalities than corporations, which is always an extra plus! 

We also mentioned that it’s a smart choice if you’re an entrepreneur, and there’s a good reason for this. If you’re just starting your business venture, you’re not going to be familiar with all the legal and financial complexities involved in running a company. It’s also a lot easier to fall into one of the many pitfalls that are out there waiting for you. The key thing about starting a business is that you make mistakes, and you learn from those mistakes, but if you’re not operating in an LLC structure, there’s every chance those initial mistakes, no matter how minimal, can be critical. 

With an LLC, however, you have a safety net. If anything goes wrong, your personal assets – and, effectively, your livelihood – are safe, and this gives you the freedom to take calculated risks and grow your business without fear of losing everything. With flexibility in management and taxation also in place, running the business is also a lot less complicated and stressful. So, overall, making your business an LLC is a win-win for any new business owner looking for success, without the risks and burdens that you’d otherwise be subjected to. 

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