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Limited liability company

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An LLC offers two key benefits:

 Protection against personal liability that would otherwise expose your personal assets to risk.

 Pass-through of profits and losses to your personal income tax return so that the LLC itself isn’t subject to corporate taxes. Members of an LLC, however, like sole proprietors, are considered to be self-employed and are subject to self-employment taxes (Social Security and Medicare).

If you have significant personal assets and are doing any risky business (anything that could expose you to costly lawsuits or bankruptcy), I encourage you to do business as an LLC or as an S or C corporation, which are covered next.

Launching & Building a Brand For Dummies

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