Overview of LLC Formation
An LLC provides liability protection and tax flexibility. To start an LLC, you need to:
- choose a name
- select a registered agent
- file formation documents
- create an operating agreement
- get an EIN
- set up licenses and permits.
The LLC structure allows smoothly distributing assets when winding down.
Tax Considerations for LLCs
The IRS treats single-member LLCs as sole proprietorships for taxes. LLCs aren’t required to have income, but the IRS may audit if an LLC claims deductions without income. The IRS only allows business loss deductions for 3 out of 5 years.
LLCs can elect C corporation status to receive refunds if estimated payments exceed liability. LLCs set up as S corporations don’t pay corporate taxes on income. States charge a formation fee.
Making Money with an LLC
To make money with an LLC, you should:
- define goals and target market
- formally register
- arrange financing and accounting
- market products and services
- provide quality and value.
Registering an LLC in California
What is the LLC 5?
To qualify a limited liability company (LLC) from another state or country to transact intrastate business in California, you must file an Application to Register a Foreign Limited Liability Company (Form LLC-5) with the California Secretary of State.
When filing the LLC-5 with the California Secretary of State, a Certificate of Good Standing (known as a Certificate of Existence in some states) from Delaware (or other state of incorporation) will need to accompany the application.
LLC Overview
LLC stands for Limited Liability Company. It is a business structure that provides limited liability protection to its owners, known as members, while still allowing the flexibility of pass-through taxation.
Advantages of LLCs
- Liability Protection: One of the main advantages of an LLC is liability protection. The personal assets of the members are protected from the debts and liabilities of the business.
LLC Taxation and Costs
The purpose of an LLC (Limited Liability Company) is to protect its owners’ personal assets. In the event of any debts or obligations of the business, the members of an LLC will not be held personally liable.
LLCs are relatively cheap compared to other forms of businesses. There’s a one-time filing fee to pay your state, and then an annual fee that’s sometimes called a ‘franchise tax’ to allow your LLC to continue to operate.