Key Benefits and Structure
A key benefit of an LLC (Limited Liability Company) over a sole proprietorship is that liability is limited to investment in the LLC. LLC laws generally protect members from incurring liability for LLC contracts and debts. LLCs combine features of partnerships, sole proprietorships, and corporations. Owners have limited liability and profits are taxed as owner income, like a partnership. They also offer flexible ownership and management structures, which can be detailed in an LLC Agreement.
The Organizer of an LLC is often one of the LLC Members, especially since many people who start an LLC file the paperwork themselves, making them both an owner and the Organizer.
Public Records and Privacy
- Each Secretary of State office maintains public records that include the ownership of every LLC registered in that state.
- To show ownership in an LLC, the actual address of your registered agent must be included on your LLC filings and becomes public record.
- Most states have a Secretary of State website where you can search for business entities to locate the owners of an LLC.
Planning and Protections
LLCs allow strategies like expansion, tax planning, and liability protection. However, it’s important to note that if an LLC elects to be treated as an S Corp for tax purposes, S Corp rules and tax treatment will apply. Non-US individuals must supply LLC and member information to obtain an EIN, and a Registered Agent must be designated to receive documents, who doesn’t have to be a member or manager. This contact information must be public record.
Future Requirements and International Perspectives
Starting January 2024, beneficial ownership information will be federally required. For single-member LLCs, passing draws to personal tax returns is the simplest approach to compensation. In comparison, in the UK, a company similar to an LLC is an LTD, offering liability protection and tax benefits. While LTDs maintain privacy to an extent, certain aspects like trading stock and reporting requirements distinguish public from private LTDs.
Please note that the above Markdown-formatted text removes repeated information as requested, and sections have been organized under relevant headings to provide clarity to the reader.