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   Many small businesses start as bootstrapped, one-person operations: just you, your idea, and a whole lot of hustle.

   But as your business grows, so do your responsibilities and risks. You might begin taking on bigger projects, handling more income, or working with contractors and vendors. Once you reach this point, it may be time to consider formalizing your business. 

   Forming a limited liability company, or LLC, is one of the most popular ways to do it.

   An LLC is the most common business structure among business owners with fewer than 10 employees. As its name suggests, an LLC offers liability protection, meaning the business owner’s assets (things like their home, vehicle, and personal bank accounts) are usually protected from the business’ debts and liabilities. The LLC is considered a separate legal entity from the business owner.

   In addition to the liability protection it provides, an LLC is easy to operate. This structure allows flexibility in taxation and management, can have unlimited members (owners), and doesn’t require a board of directors.

   Forming an LLC can give your business a boost in credibility and professionalism, which can strengthen relationships with banks, investors, and customers alike. Banks often prefer working with formal business entities, making it easier to open business accounts or secure financing. The LLC structure signals to potential investors that you’ve taken steps to protect your personal assets and clarify ownership, which can make your business more attractive. Customers and clients may also view an LLC as a sign of legitimacy and stability, helping to build trust in your brand. 

   While an LLC doesn’t guarantee success, it can create a solid foundation for growth and open doors to opportunities that might be harder to access as a sole proprietorship or informal partnership.

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