Key Features of LLCs
LLCs prevent double taxation. Income and expenses go on the member’s tax return. Setting up an LLC shields assets from debts and lawsuits. Members manage LLCs jointly. Profits can be taxed at corporate and personal levels. Members owe self-employment tax.
Regulation and Formation of LLCs
States regulate LLCs. You can form one yourself or use a service. LLCs allow owners to enjoy corporate advantages while retaining benefits. There are benefits and drawbacks to each LLC tax structure. Corporations limit liability; partnerships enable pass-through taxation. LLCs have flexibility. Owners choose tax status but may face double taxation.
Costs and Protection
The main LLC cost is the state filing fee. An LLC protects personal assets. If the business has issues, your personal assets are safe. For tax purposes, the IRS treats an LLC as a pass-through entity, meaning LLCs don’t pay taxes on business income. Instead, income and expenses go directly on the member’s tax return. LLC owners are not personally liable for company debts. However, LLCs can be expensive to form and maintain.
A limited liability company (LLC) in Kansas protects personal assets and prevents double taxation of owners. Disputes between members are possible.
How is an LLC Taxed?
If an LLC has multiple owners, it’s taxed like a partnership. Another downside is taxation complexity. Members also owe self-employment tax.