Similar to a company or a corporation, an LLC or Limited Liability Company is a separate and totally distinct entity. The LLC can have a tax identification number. It can also open a checking account and do business under its very own identity. The LLC is known for having the simplest enterprise structure. When compared to the S Corp and C Corp, the LLC structure is known for its versatility. An LLC can be created with the help of an online partner through an entity like https://llcguys.com.
Types of LLCs
Different LLCs can work for specific business conditions. The most usual forms are Domestic LLC, International LLC, and Professional LLC.
This type operates in the same state where it was created. It can be called Domestic LLC. When people say LLC, most often they reference Domestic LLC.
A domestic LLC has to apply for registration as a foreign LLC if it wants to open a brand-new office if not change the state where it operates. When you have a company and New York and plan to expand to Florida, you have to acquire a foreign LLC in Florida.
Companies that offer professional services such as those that offer legal or accounting practices are to be registered as professional LLCs. Professional licenses issued by the state are required for the company to qualify for a professional LLC. It is worth noting though that in a professional LLC designation is that the personal liability clause of the individuals is not protected from malpractice claims. For other details about this, you may check sites like https://llcguys.com.
How Are LLCs Taxed?
The federal government considers LLCs as a “disregarded entity.” With this particular business structure, the IRS will tax the entity as a sole proprietorship (single member), a partnership (with more than one member), or a corporation (can be an S or C corporation). After this is selected, the business entity then calculates the taxes based on the IRS tax rules. This then prepares an LLC return for the state where their business is conducted. What makes this taxation structure beneficial for the LLCs is that they are subject to individual federal taxes unless the LLC is a C-corp type. The main reason for this is that the profits and losses of an LLC are passed to every owner. Each one of them will then submit this detail in their personal income tax return.