What is an LLC usually taxed as?
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Asset Protection and Taxation
- A limited liability company (LLC) protects personal assets.
- LLC owners are not personally liable for company debts.
- LLCs prevent double taxation of owners.
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Formation and Regulation
- Setting up an LLC shields assets from business debts and lawsuits.
- States regulate LLCs. The main LLC cost is the state filing fee.
- You can form one yourself or use a service.
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Ownership and Tax Complexity
- Members manage LLCs jointly.
- Another LLC downside is taxation complexity.
- Profits can be taxed at corporate and personal levels. Members also owe self-employment tax.
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Taxation Structures
- If an LLC has multiple owners, it’s taxed like a partnership.
- LLCs allow owners to enjoy corporate advantages while retaining tax benefits.
- There are benefits and drawbacks to each LLC tax structure.