Overview of LLCs
A limited liability company shields assets from business debts and lawsuits. Setting up an LLC prevents double taxation of owners. LLC income and expenses go directly on the member’s tax return. Members manage LLCs jointly. LLCs allow owners to enjoy corporate advantages while retaining tax benefits.
Formation and Taxation of LLCs
States regulate LLCs. You can form one yourself or use a service. The main LLC cost is the state filing fee. LLC owners are not personally liable for company debts. However, LLCs can be expensive to form and maintain. If an LLC has multiple owners, it’s taxed like a partnership. Profits can be taxed at corporate and personal levels. Members also owe self-employment tax.
LLC Tax Structures and Considerations
There are benefits and drawbacks to each LLC tax structure. Owners choose tax status but may face double taxation. LLCs prevent double taxation and limit liability. But disputes between members are possible. Corporations limit liability; partnerships enable pass-through taxation. LLCs are hybrids, with flexibility.
FAQs on LLC Taxation
What are the taxes on an LLC in Montana?
What is an LLC usually taxed as?