Forming an LLC
A limited liability company (LLC) protects your personal assets and maintains limited liability. Forming an LLC provides flexibility in choosing taxation and allows easy transfer of ownership.
- Get a unique business name and address in your state.
- Get the formation document.
- Get a registered agent.
- Fill out and file the document.
The main LLC cost is the filing fee, which ranges from forty to five hundred dollars depending on the state. Use an online service and pay only mandatory state fees to form an LLC for free. Be cautious, as some companies falsely claim free registration.
Managing LLC Costs
Non U.S. individuals must provide LLC information to get an Employer Identification Number (EIN). You should also craft an operating agreement.
LLC Termination and Taxes
LLC termination gain or loss is determined per member. Track your investment basis, which is adjusted annually per your K-1. To determine capital gain or loss, compare the final distribution to your basis.
The Most Tax-Efficient Payment Method
When considering the most tax-efficient way to pay yourself, remember to evaluate your investment basis and its annual adjustments. Assess the final distribution against this basis to ascertain the capital gains or losses involved.