LLC/Limited Liability Company
- What is a Limited Liability Company/LLC?
- A Limited Liability Company (LLC) is a business structure similar to, but significantly different in several ways from, a corporation. An LLC is a business entity that exists separately from its owners (known as Members), meaning, just like a human, it can own property and sign contracts.
- What are the benefits of a Limited Liability Company/LLC?
- An LLC combines the protection from liability that a corporation provides (known as "limited liability") with the simplicity of being taxed as an individual or partnership (known as "pass-through" taxation where the owners pay the LLC taxes on their personal tax returns).
- How is an LLC different from a corporation?
- An LLC differs from a corporation in many different respects, but in general it has less operating formalities and less complicated taxation rules. By default an LLC does not need to issue shares, elect officers, etc. A corporation gets "double taxed" in that profits are taxed at the corporate tax rate and then taxed again on the owner's personal tax returns once paid out. Profits from the LLC are taxed once on the owners personal tax return. An LLC is a strong choice for new and simple businesses that could benefit from asset protection.
- What is the annual LLC tax and when am I required to pay it?
- The annual LLC tax is a yearly payment to the state Franchise Tax Board. This fee is due 90 days after the LLC's formation and by April 15th every year after.