Should I Start an LLC for My Travel Agency?

Every travel enthusiast running a travel agency may have to rethink their business structure at some point in their life. From optimizing the profits to paying taxes, your business will take many shapes and forms over the years. There is also a legal aspect that needs to be taken care of. So, all of this requires a suitable business plan.

In this article, we will explore the different types of business structures for your travel agency and whether you should start an LLC for your travel agency or not. Keep reading to learn more on this topic.

Choosing the Right Business Structure

To choose the right business structure, there are four main options:

• Sole proprietorship
• Partnership company
• Limited liability company or LLC
• Corporation

Sole Proprietorship

The simplest business model is the sole proprietorship, and it is the least expensive, with little to no legal expenses. Since this is the default model, there are no complex tax structures.

You are the business’s sole owner, and the finances directly flow through your account. This can benefit you if you are a home-based business since the structure doesn’t involve any partners. However, your business and personal assets are at legal risk since you have no legal protection.

Partnership Company

A partnership consists of two or more members, each liable for the financial obligations regarding the business. A company with partners is similar to sole-proprietorship regarding taxes and other legal matters. In short, you still don’t have limited liability protections. In addition, having more partners increases the risk of disagreements and things not working out, as there are too many opinions.

Limited Liability Company

An LLC takes the form of a corporation rather than a partnership. It provides certain tax benefits, such as limiting the personal liability of its owners. Not only that, but it also makes the pass-through taxation and other legal matters flexible and straightforward.

You, however, need some money to form an LLC. The cost for establishing an LLC is usually between $40 to $500, depending on which state you are registering in.

Corporation

A corporation is an organization that is run by a board of directors or shareholders, with the goal of making a profit. The corporation may also be referred to as a company or firm. The power within the organization needs to be managed and organized among the members. In a corporation, a separate legal entity is created that has every legal right and responsibility. Corporations take care of your business but limit your financial liability.

Should I Start an LLC for My Travel Agency?

Out of all the models listed above, an LLC is best suited for a small business like a travel agency. They provide limited liability protection, which means an LLC will protect your assets in case of downfall. Moreover, forming an LLC for your travel agency will also protect your assets in case of loan defaults.

To help you decide better, here is a list of all the benefits you’ll get by starting an LLC:

Liability Protection

Forming an LLC is the best thing you can do to protect your assets. You don’t know when things will go wrong, so preparing ahead is always a good idea. This will keep all the financial damage away from your assets and only directed to the business’ finances.

“An LLC, or Limited Liability Company, is perfect for young entrepreneurs and start-up owners. Having an LLC offers liability protection. In the case of an emergency, your assets will be secure.” – David Reed, the Co-Founder of LLCStars.com.

Affordable

Starting an LLC is very affordable, especially for new start-ups who don’t want to invest a lot. Forming an LLC can cost around $40 to $500, but that depends on where you live and what services you acquire.

For example, signing up with LLC forming services will cost more, but establishing one on your own will be less expensive.

Easy Formation

To establish an LLC, you don’t need to go through a ton of checks and balances. All you need is a name, some important documents, and business certifications or licenses (not always). An LLC is also very easy to maintain, and you can even make alterations to your structure without doing everything all over again.

More Control of Your Business

When you form an LLC, you still have power over your business. The LLC only takes care of the taxation and other legal financial matters. The business is yours, and you can take it in any direction you want without any interference.

Makes Your Business Credible

An established LLC behind your business makes it more legit and credible. People are more likely to work with a business that seems more official, and an LLC does a great job in doing that.

Final Thoughts

The business structure of your travel agency greatly depends on where it stands right now. If it is early, forming an LLC is a good idea. If things go south, you will have limited liability protection, which will save your personal assets. So, starting an LLC for your travel agency is an incredible step to take, whether it is budding or on its feet.