Should you form a business entity for your home based business?
When you start working to sell products or services from your home, you are running your home based business as a sole proprietorship. As a sole proprietor, if you end up being sued, your personal property is not protected and your family’s assets are put at risk of being seized. This includes your home, car, personal bank account and any other assets your family may have. On the other hand, if you form a legal entity and operate it according to law, then your personal assets can be protected.
If you have your own home based business, including online sales or multilevel marketing, there are several reasons why forming a business entity would be beneficial to your business and yourself. By forming a legal entity, you can reduce your personal liability and reduce your taxes. Personal liability is reduced when you operate your business as a legal entity because then only the assets of the legal entity are at risk. It is a great investment which will give you peace of mind now, and most importantly, when you need it later.
In addition to personal asset protection, forming a business entity can help you reduce your taxes. When you work as an employee, your employer pays part of your Social Security and Medicare taxes. However if you run your own home based business as a sole proprietor, you must pay all of your Social Security and Medicare taxes yourself. This is the self-employment tax. Some business entities can reduce the amount of self-employment tax you pay.
It is important to contact a licensed business attorney if you’d like to discuss the advantages of forming a business entity. You can contact Wheeler Legal PLLC by calling (321) 209-5995 to schedule a consultation and find out how this firm can help you protect your assets.
Disclaimer: The information contained above is provided for general informational purposes only, and does not constitute legal advice, nor is it intended to create an attorney-client relationship. This firm aims to provide quality information, but we make no claims, promises or guarantees about the accuracy, completeness, or adequacy of the information contained in or linked to this post. Nothing provided herein should be used as a substitute for the advice of competent counsel.