LLC’s: What’s all the hype about?

The Limited Liability Company (LLC) status has sparked the interest of many business owners since it’s inception. This relatively new form of entity is intriguing because it offers the limited liability benefits of a corporation while still offering the flexible management and pass-through taxation benefits enjoyed by sole proprietors and partnerships.

LLC owners are referred to as members. A member can be an individual, corporation, other LLC, or foreign entity. Unlike an S-Corporation, there is no limit on the number of members an LLC can have and most states allow single membership, such as a sole proprietor. If the LLC is a sole proprietorship, the entity is ignored for income tax purposes and the net income is reported on the individual member’s Form 1040, Schedule C, E, or F. Multiple member LLC’s file either Form 1120 or 1120S if considered a corporation or Form 1065 if considered a partnership.

Unfortunately there are a few industries that are not able to take advantage of LLC entity classification. Banks, insurance companies, and nonprofit organizations are among those unable to be classified as Limited Liability Companies.

To discuss various tax implications and whether it would be advantageous for your business to be classified as an LLC, you may contact our office at (330) 852-2479. Our office would be happy to assist you in making the decision that is best for your business.