Limited Liability Company (LLC): Protection and Taxation
- Protection of Personal Assets: LLC shields personal assets from business issues.
- Taxation Benefits: IRS treats LLCs as pass-through entities, avoiding business income taxes.
LLCs prevent double taxation and limit liability. However, conflicts between members may arise. The complexity of taxation, including self-employment tax and taxation at corporate and personal levels, can be challenging for LLC owners.
LLC Formation and Regulation
- State Regulation: States oversee LLC regulations.
- Formation Costs: State filing fees are the primary expense for setting up an LLC.
If an LLC has multiple owners, it follows partnership taxation rules. Owners can enjoy corporate advantages while maintaining tax benefits within the LLC structure. LLCs offer flexibility but may lead to double taxation for owners.
Michigan Business Tax and LLCs
Do LLCs pay Michigan business tax? States regulate LLCs, with the filing fee being a significant cost. LLCs offer protection for personal assets, prevent double taxation, and limit liability, but internal disputes among members are possible.