Suggestions from the Business Insurance Center Team
Starting a new business venture is both exciting and nerve-wracking. You have an excellent service or product that can help your clients and you’ve taken the necessary steps to get started. You have opened your bank account and your family understands that you have “office hours” each night after dinner. You have joined the ranks of thousands of other entrepreneurs starting a new business each year. You know you will succeed and are doing everything you can to achieve the results you want. But are you prepared for a situation when a disgruntled client sues you? The classification of your business determines whether your personal assets as well as your business assets are affected by a claim
Most people start out as a sole proprietor. Others invest in a limited liability company (LLC). Do you know which entity you should choose? No matter which choice you make, working with knowledgeable commercial insurance providers such as the brokers at the Business Insurance Center is a step in the right direction. We can assist you in finding the best coverage and reasonable rates so that you can be protected when the unexpected happens.
Understanding the Differences between a Sole Proprietorship and an LLC
When you understand the differences between conducting business as a sole proprietor or an LLC, you will see the risk you are exposed to and the taxes requirements for each. You should speak with your tax accountant for specific questions regarding taxes but understanding the main differences between the two types are listed here:
- You are a sole proprietor by default. According to the IRS, if you own an unincorporated business that is not registered as a corporation, partnership, or limited liability company, you are a sole proprietor.
- You are personally liable for any debt your business accrues if you choose sole proprietorship. This goes for lawsuits and other business obligations, as well. Your personal assets can be used to cover any lawsuits after business assets are taken.
- You will pay some fees for filing for an LLC. Prices vary across the states and may take a few weeks. Sole proprietors do not have to pay fees, and you will manage your own tax withholding and insurance.
- Your business may look more credible as an LLC. Lenders look at businesses differently when they are listed as a corporation, partnership, or limited liability company. You may have more collateral for a bank to consider for loans.
- The ownership of a sole proprietorship stops when you pass away. If you want your spouse or children to take over when you die, you may want to consider other measures.
Safeguard Your Enterprise with Commercial Coverage from the Business Insurance Center
Deciding on the best entity for your new business is paramount. Once you choose, reach out to the experienced brokers at the Business Insurance Center. We work with many different businesses across a wide range of industries. We can help you get the most coverage for your budget. Let us help you protect your new venture.
Request a quote online or call and speak with a knowledgeable and experienced broker at the Business Insurance Center. We have a 24/7 call center to serve you and an online Live Chat operator.