Did you know that last year, the marijuana industry in the United States saw $52 billion in sales?
There have even been reports of a 76% increase in marijuana-related jobs across the entire United States, which means that the marijuana industry is showing no signs of slowing down.
If you’ve been thinking about starting a marijuana business, Now is a great time to do so. However, it can be tricky understanding how to structure your marijuana business if you’re not sure Whether you should legally register as an incorporation or an LLC.
That’s what today, we’ve created a complete guide to help you better understand how to structure at your marijuana business so that you can operate legally in the United States. Keep reading to learn more!
What Is an Incorporation?
Incorporation is a term used to describe a corporate entity. Basically, this means that there is a separation of the assets that the company has from the assets of the investors and the owners of the company.
For your company to register as an incorporation, you have to write up a document that’s referred to as the Articles of Incorporation as well as enumerating the shareholders of the business.
What Is an LLC?
LLC stands for a limited liability company. An LLC is the easiest way for you to structure your business to protect any personal assets that you have in case your company is involved in a lawsuit.
Companies that are registered as in the LLC can be owned by one person or a group of people. However, if the company is owned by one person, it will be referred to as a single-member LLC. If the organization is owned by a group of people, it will be referred to as a multi-member LLC.
What Are the Benefits of Registering as an Incorporation?
As a small business owner, you probably understand that owning a small business can be risky. Let’s take a closer look at the benefits of registering as an incorporation and how it can help to better protect you as a business owner.
Keeps Your Personal Assets Protected
The best way that you can keep your personal assets protected is by registering as an incorporation. This means that when you register your business, your company will gain the ability to carry on business, game liabilities, own property, and even can sue or be sued by other people.
In addition, this also means that that your incorporation Will be held legally responsible for any debts that incur. If your company begins to struggle financially and goes into debt, the personal assets that you own, the director owns, any officers own, and any shareholders own will be protected.
Increase the Credibility of Your Business
Not only will registering as incorporation to protect your finances, but it will also help to increase the credibility of your company. Any business associates, suppliers, and even customers that work with your business may receive your company is more stable than they would if you register your business as an LLC.
Option of Anonymity
If you’re interested in keeping your name private as they’re opening up your marijuana business, registering your company as an incorporation may be a better option for you. This is because a corporation has options for anonymity!
What Are the Benefits of Registering as an LLC?
If registering as an incoropration doesn’t sound like the best personal fit for your marijuana business, registering as an LLC may be the best next option for you. Let’s take a closer look at the benefits of registering as an LLC:
Registering your business as a limited liability company is a lot easier to do than registering as incorporation. You don’t have to assign any formal officer positions, record company resolutions, take note a company minutes, or hold annual meetings for your company to be registered as an LLC.
There are several different ways that you can register your LLC, which is a great solution if you’re looking for flexibility. If you’re the only person that owns your marijuana business, you can register your LLC as a single member. However, if there are multiple people who own your marijuana business, you can register your company as a multi-member LLC.
You also have the option to allow your LLC to be taxed as an S corp or a C Corp, depending on which one is more beneficial to your business.
Options for Business Loans
By registering your business as a limited liability corporation, you will have more credibility. An LLC business is recognized by many people to be more credible than if you were to register your business as a partnership or as a Sole proprietorship.
Once you have registered your business as an LLC, your company is eligible to begin building a credit history. This means that you will have the opportunity to gain access to business loans and to build a line of credit under the name of your business and not just your personal name.
Understanding How to Structure Your Marijuana Business
By having a solid understanding of how you should structure your marijuana business, it’ll be easier for you to launch your new cannabis organization! The cannabis industry is going to continue to grow in the United States, so there’s never been a better time to start a legal marijuana business!
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