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How Will Starting an LLC Protect Your Business?

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As the business landscape grows increasingly competitive each year, small and medium-sized businesses (SMBs) face more threats.

According to’s article on the the 10 biggest risks for businesses in 2022, entrepreneurs will have to face possibilities for data breaches, climate change challenges, the great resignation, inflation, and many others. So how can businesses go about protecting themselves?

Any person running or planning to start a business should consider forming a limited liability company or an LLC. An LLC basically ensures that its owner or owners will not be personally liable for any debts incurred or any business-related lawsuits. And although some of its major benefits are geared toward protecting the business owners, it also has plenty of benefits for the business itself. Here are a few of them:

Lets You Acquire an EIN

Business structures like sole proprietorships and single-member LLCs do not require getting an Employer Identification Number (EIN). But according to’s post on ‘What is an EIN and Who Needs One?’, obtaining one will significantly simplify the process of tracking and managing your business expenses. Furthermore, it will enable your business to apply for credit and business loans in times of need, making it one of the best benefits of an LLC.

Pass-Through Taxation

LLCs are pass-through entities, meaning any business profits are passed through the businesses to the owner and taxed at the owner’s personal tax rates.

Owners can then qualify for the special 20% tax deduction created by the Tax Cuts and Jobs Act enacted in 2018. also reports that this act is extended until 2025, and possibly extended even more depending on the outcome of the Inflation Reduction Act.

Get Your Business Insured

Depending on the LLC, you may be required to have certain types of insurance in place – most states, for instance, require employers to have worker’s compensation insurance.

This is beneficial in the long run, because many businesses survive their way through lawsuits, insurance claims, and injury claims thanks to the right type of insurance and an LLC in place. Professional liability and general liability insurance are two important ones to consider.

Protect Your Digital Assets

We highlight in our article on ‘How To Protect Your Digital Assets’ that cybersecurity has become a major concern in today’s business landscape. However, surveys have reported that just 5% of small business owners are aware of the threat that cybersecurity poses. Cyber liability insurance is also one of the ways you can protect your SMB from the high costs of data breaches or ransomware attacks, which are becoming more common nowadays.

Give Your Business Credibility

Lastly, it can protect your business by greatly improving its image. RevenueGeeks co-founder Elisa Bender states in a article that “Most businesses incorporate to improve credibility.”

By having ‘Inc.’ or ‘LLC’ to your brand name itself, you’ll be able to deter most entities that will want to slander or cheat your organization because they know that you’re likely covered by insurance and other layers of protection.


By registering your business as an LLC, you’ll be able to acquire an EIN, enjoy pass-through taxation benefits, apply for business insurance and digital asset protection, and gain business credibility.

You’ll also safeguard yourself as a business owner by not being held liable for business-related debts or lawsuits. There are many more benefits to LLCs, so make sure to do your research as well to find the best course for your business.

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