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Limited Liability Company
Limited Liability Company:
Limited Liability Company (LLC) is a business structure in the United States whereby the Owners are not personally liable for the Companys debts or liabilities. Limited Liability companies are Hybrid entities that combine the characteristics of a corporation with those of a Partnership or Sole Proprietorship.
What LLC means:
Limited Liability Company. A limited Liability Company (LLC) is a Hybrid legal entity having certain characteristics of both a corporation and a Partnership or Sole Proprietorship (depending on how many Owners there are).
What does an LLC do for you:
If you have business partners or employees, an LLC protects you from personal Liability for your co-Owners' or employees' actions. An LLC gives you a structure for operating your business, including making decisions, dividing profits and losses, and dealing with new or departing Owners. An LLC offers taxation options.
What is the downside to an LLC:
Profits subject to social security and medicare taxes. In some circumstances, Owners of an LLC may end up paying more taxes than Owners of a corporation. Salaries and profits of an LLC are subject to self-employment taxes, currently equal to a combined 15.3%.
Does an LLC really protect you:
Personal Liability for Actions by LLC Co-Owners and Employees. In all states, having an LLC will protect Owners from personal Liability for any wrongdoing committed by the co-Owners or employees of an LLC during the course of business. But the LLC Owners would not be personally liable for that debt.
What can I write off as an LLC:
The following are some of the most common LLC tax deductions across industries:
Rental expense. LLCs can deduct the amount paid to rent their offices or retail spaces.
Charitable giving. Insurance.
Tangible property. Professional expenses.
Meals and entertainment. Independent contractors.
Cost of goods sold.
How do Owners of LLC pay themselves:
As the Owner of a single-member LLC, you don't get paid a salary or wages. Instead, you pay yourself by taking money out of the LLC's profits as needed. That's called an Owner's draw. You can simply write yourself a check or transfer the money from your LLC's bank account to your personal bank account.
What do I need for an LLC:
However, certain elements of structure are requirements for an LLC. Business Name. Your LLC must have a name that is unique and is not the same or confusingly similar to another business.
Registered Agent. Operating Agreement.
Articles of Organization. Business Licenses and Permits.
Statement of Information Form.
Tax Forms.
Does an LLC pay less taxes:
LLC as an S Corporation: LLCs set up as S corporations file a Form 1120S but don't pay any corporate taxes on the income. Instead, the shareholders of the LLC report their share of income on their personal tax returns. This avoids double taxation.
Does a single member LLC need a separate bank account:
If you operate as a limited Liability Company (LLC) or a corporation, you must open a separate business account. Sole Proprietorships and Partnerships without DBAs are not legally required to open a business bank account.
Do you pay taxes on LLC if no income:
But even though an inactive LLC has no income or expenses for a year, it might still be required to file a federal income tax return. LLC tax filing requirements depend on the way the LLC is taxed. An LLC may be disregarded as an entity for tax purposes, or it may be taxed as a Partnership or a corporation.
Can an LLC be a parent Company:
Since an LLC is a form of corporation, rather than a Sole Proprietorship or Partnership, it can function as a parent Company. You can form a hierarchy of several niche companies under one main LLC.
How do I set up multiple businesses under one LLC:
You can run two or more businesses under one LLC by either: running all the business activities under one LLC name, or. registering DBAs doing business as, also known as Fictitious Names.
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