Business Basics: What’s an LLC and should you form one?

When you’re just getting started with your business, one of the first big decisions you’ll face is how to legally structure it. It may sound boring or confusing, but your business structure affects how you’re taxed, your personal liability, and even how easy it is to raise money or bring on partners later.

In this post, I’m breaking down the basics of business structures, especially LLCs (Limited

Liability Companies), to help you feel more confident. I’m using language from the Small Business Administration (SBA) and the IRS, but this is not legal or tax advice. Always check with a licensed professional to decide what’s right for you. 

The most common legal structures

Let’s start with the basics. According to the SBA and IRS, here are the four most common types of business structures in the U.S.:

1. Sole Proprietorship

   • Easiest and cheapest to start

   • No legal separation between you and your business

   • You get all the profits, but also all the risk

     
     

2. Partnership

   • Owned by two or more people

   • Can be simple (general partnership) or more formal (limited partnership)

   • Partners share profits and responsibilities

     
     

3. Corporation (C Corp or S Corp)

   • Separate legal entity from the owners

   • More complex rules, more paperwork

   • Often chosen by companies that plan to raise money or scale big

     
     

4. Limited Liability Company (LLC)

   • A flexible option that gives you legal protection like a corporation, but with less paperwork

   • Can have one owner or many

   • Popular with small business owners, side hustlers, and solopreneurs

     
     

So, what exactly is an LLC?

An LLC (Limited Liability Company) is one of the most popular choices for small business owners and for good reason. Here’s what makes it special:

• Limited liability protection: Your personal assets (like your home or car or other personal assets) are usually protected if your business gets sued or runs into debt

• Simple management structure: Fewer rules than a corporation

• Flexible tax options: You can choose how you want to be taxed – as a sole proprietor, partnership, or even an S Corp in some cases

• One owner or many: You can be a “single-member” LLC or form one with others

  
  

What you need to start an LLC (General steps)

Every state is a little different, but here are the typical steps to start your LLC:

1. Pick a name for your business (check your state’s name rules)

2. Choose a registered agent (someone who can receive legal documents)

3. File Articles of Organization with your state

4. Create an Operating Agreement (especially important if you have partners)

5. Get an EIN (Employer Identification Number) from the IRS

6. Register for any state taxes or licenses you need

   
   

In New York, for example, there’s also a publication requirement, which means you need to announce your LLC formation in two newspapers. (Yes, this seems outdated in a digital world but it's not my rule!)

Why an LLC might be right for you

An LLC can be a great option if:

• You want to protect your personal assets

• You’re running a side hustle or full-time business

• You want flexibility in how you're taxed

• You want a balance of structure and simplicity

But if you're planning to raise outside funding, take on investors, or go public, you may want to explore forming a C Corporation instead.

Let’s keep it simple

Setting up your business structure doesn’t have to be scary or confusing. My goal is to make this journey easier by breaking things down step by step.

❓Have questions about LLCs, side hustles, or setting up your first business? Reach out to schedule a free Discovery Call, I'd love to help you navigate this!