An LLC, or limited liability company, can be considered to be a marriage between a corporation and a partnership. Basically, with an LLC you get many of the same benefits that a corporation enjoys, without the majority of the formalities that come with a corporation.
For tax purposes, the owners, or members, of an LLC get treated just like a partnership. This means that taxes pass right through the LLC and are paid by the members. Where in a corporation, both the company itself and its employees pay taxes.
Because of this, an LLC does not suffer from the double-taxation issue that plagues a corporation. This simply means that income is only taxed once because it flows right through the LLC, directly to the owners (or employees). But an LLC must pay federal and any applicable state payroll taxes.
You choose the tax treatment you desire when you set up your LLC. You can be taxed as a C corporation, an S corporation, or treated like a sole proprietor. With an LLC, the decision is yours to make.
The members of a limited liability company are afforded certain personal liability protection with an LLC, assuming it is set up right and all business and personal activities are properly separated. This is one of the biggest reasons why people choose the LLC structure over being a sole proprietor.
The person that forms the LLC does not have to actually be a member of the LLC. You can have an online LLC formation company do the work for you, thus ensuring that everything is set up properly.
A members liability is limited to the financial contribution made by that member. And an LLCs structure allows you to bring in multiple partners, who can either be actively involved in the business, or serve as silent investors.
While an LLC shares some similarities with a traditional corporation, it offers its owners greater flexibility. For businesses that have a limited number of owners, it is an ideal business structure.
The LLC is a relatively new form of business entity, at least in the United States. As a matter of fact, as early as 1986, LLCs were only allowed in two states. Now, every state recognizes this business structure. - 15478
For tax purposes, the owners, or members, of an LLC get treated just like a partnership. This means that taxes pass right through the LLC and are paid by the members. Where in a corporation, both the company itself and its employees pay taxes.
Because of this, an LLC does not suffer from the double-taxation issue that plagues a corporation. This simply means that income is only taxed once because it flows right through the LLC, directly to the owners (or employees). But an LLC must pay federal and any applicable state payroll taxes.
You choose the tax treatment you desire when you set up your LLC. You can be taxed as a C corporation, an S corporation, or treated like a sole proprietor. With an LLC, the decision is yours to make.
The members of a limited liability company are afforded certain personal liability protection with an LLC, assuming it is set up right and all business and personal activities are properly separated. This is one of the biggest reasons why people choose the LLC structure over being a sole proprietor.
The person that forms the LLC does not have to actually be a member of the LLC. You can have an online LLC formation company do the work for you, thus ensuring that everything is set up properly.
A members liability is limited to the financial contribution made by that member. And an LLCs structure allows you to bring in multiple partners, who can either be actively involved in the business, or serve as silent investors.
While an LLC shares some similarities with a traditional corporation, it offers its owners greater flexibility. For businesses that have a limited number of owners, it is an ideal business structure.
The LLC is a relatively new form of business entity, at least in the United States. As a matter of fact, as early as 1986, LLCs were only allowed in two states. Now, every state recognizes this business structure. - 15478
About the Author:
Author Caressa Waechter owns a business and is a strong believer in starting an LLC for your business. Learn more about starting an LLC online by visiting her website: Creating a LLC
