Simple Guide to Understanding LLC's
A limited liability company (or LLC) is a type of legal entity that is registered with both your state and federal governments. LLC's are separate entities from the individuals which created and owned them. LLC's are a great way to protect personal assets from the liabilities incurred by the business, and protect the owners (and even shareholders) from claims to personally owned assets such as your home. There are very few instances where a court will allow what is called "piercing the corporate veil" and hold the owners and shareholders of an LLC personally liable.
LLC's with only one owner are single-member LLCs and taxed like a sole proprietor reporting their business taxes on a Schedule C of the personal tax return. LLC owners will pay the same personal tax rate. LLC's with two or more owners are viewed and taxed as a partnership.
LLC's are great way to get started and see if your business takes hold and starts bringing in revenue. If you find that you are profiting at least $40,000 per year, you would benefit tremendously from working with a tax professional that can advise on the appropriate entity structure that could save you on your taxes.
If you have questions about LLCs, your small business, or your taxes, send me an email so that we can set up a time to talk about your unique situation. Initial calls are always free, and you could walk away with with big time savings.