As a beauty salon owner, you may be wondering which business structure is best for you. The answer is an LLC. It can protect your assets from lawsuits and give you other benefits. One of the biggest misconceptions surrounding LLCs is that they’re complex to form and run. On the contrary, the LLC business structure is easy to start with only one document. Check out LLCBuddy for more information on LLC formation. If you want to know more about why and how the LLC business structure makes the most sense for your beauty salon, this article is for you.
Why An LLC Is The Best Business Structure For Your Beauty Salon
Injuries can happen at any time in a salon. For example, one of your employees might accidentally cut or burn a client. As a result, a client could sue you and your beauty salon for damages. The client might even go after your personal assets. However, if you have an LLC, legal matters won’t affect your assets, such as your home or vehicle. With a professional liability insurance policy, you’ll be able to face any worst-case scenario.
With an LLC in place, your insurance company will pay the damages. This way, you can protect your reputation while keeping your beauty salon up and running. To learn more about registering and running an LLC, you can visit the LLCStars.com website.
“Forming an LLC is not as complex as most people think. It only takes a few documents to establish your LLC.” – David Reed, the Co-Founder of LLCStars
Benefits Of Having An LLC For Your Beauty Salon
In addition to having legal protection, there are various other advantages to having an LLC. We’ve listed a few of these below:
With an LLC business structure, you don’t need to file annual reports or run yearly shareholder’s meetings. Whether you’re a one-person show or have other partners, the LLC business structure will fit your business structure like a glove. Having less paperwork to worry about will give you more time to focus on your business.
Increase Your Borrowing Power
You may need to purchase beauty salon supplies such as shampoo stations, hairstylist tools, and facial machines. The LLC business structure allows you to take out a loan to buy the necessary items for your business. As a result, you can repay the loan later without stressing your working capital. Furthermore, you can create a separate business bank account for your beauty salon for business payments and expenses. As a result, you can run your bookkeeping process smoothly.
Enjoy Limited Liability
The most obvious benefit of an LLC is in its name, “limited liability.” The term refers to the separation between your personal and business assets. Your clients can sue you as a business, but your personal assets will remain safe. The protection also extends to other partners in your LLC. So, your team can act as a unified front during a financial or legal crisis.
The LLC business structure simplifies things like taxes for you. Unlike other business structures, you don’t pay owner income taxes with an LLC. As a result, you keep your business taxes separate from your private assets. Furthermore, you get to keep more of what you make. We’ll discuss this advantage in detail later.
Beauty salons are linked to the highly competitive fashion industry, so you must remain ahead of the competition. An LLC helps you safeguard your brand from competitors imitating and copying your name. Moreover, it helps protect your trademarks and copyrights to stop others from stealing your hard work.
Better Organization Structure
The best part about having an LLC is the organizational structure. Each team member has a set of duties and responsibilities mentioned in your legal documents. It’ll help your beauty salon run like a fine-tuned machine as everyone has specific organizational roles.
When hiring a new team member, you know what to expect. For example, you may need an accountant on your team. So, that person would carry out accounting tasks without getting into other aspects of your business.
The Best Business Structure For A Beauty Salon: LLC vs. Corporation
Do you know about pass-through taxation? It’s one of the reasons why you may want to choose the LLC business structure for your beauty salon. Lawmakers view corporations as persons who must pay total taxes.
Beauty salon owners would pay taxes on their corporate income and their owner’s salary income. Thus, you pay double the taxes. In a corporation, your employees, shareholders, and partners also must pay income taxes separate from your company’s taxes. The only way to avoid paying more in taxes is to consider an LLC business structure.
Let’s say a corporation makes $10,000 net profit in one month. They would pay taxes on that amount of money. If the beauty salon spent $3,000 on supplies and other expenses, they would still pay owner income taxes on the leftover $7,000 profit.
However, the LLC business structure allows you to pay one type of tax regardless of how much profit your beauty salon generates. You only pay taxes on what you make before deducting expenses. So, any leftover money is purely yours tax-free. As a result, you can keep the money you make after paying your LLC taxes.
In conclusion, an LLC is a great business structure for your beauty salon to protect your assets from business debts and lawsuits. Furthermore, you can get an insurance policy and build a more comprehensive safety net to face any crisis.
An LLC doesn’t require much paperwork, helps you get a business bank account, and prevents competitors from copying you. Most of all, you won’t have to pay as much in taxes. Therefore, the LLC business structure is the way to go if you want your beauty salon to grow and thrive.