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Limited
Liability Corporation
Why
should I form a LLC?
We
commonly hear, "Do I need to turn my small business into
a limited liability corporation?" The main advantages of
forming a limited liability company (often mistakenly referred
to as a 'limited liability corporation') are for the limited
personal liability protection and tax benefits. Partnerships,
and sole proprietorships, as well as LLCs, offer "pass
through" taxation. This taxation allows the member / members
of the LLC, to "pass" the income through the LLC and
file the business income on individual tax returns. Unlike partnerships
or sole-proprietor businesses, LLCs can choose to leave the
income of the LLC within the LLC and have it taxed like a corporation.
How
does the filing process work?
Using
our easy online filing service, the question - "How to
form a limited liability company or corporation?" is answered.
Simply fill in the various fields on our easy to follow order
form, and we take care of the rest. Once submitted, we analyze
the information, making sure everything is filled out correctly
and completely. We then check for name availability and file
the documents with the state. Upon state approval of your company,
we prepare the documents for your Federal Tax ID (FEIN), as
well as prepare your corporate kit and corporate seal. After
you sign the FEIN documents, we will process the application
with the IRS and email your FEIN immediately. That's it. It's
that easy.
How
does an LLC maximize tax advantages?
With
a "C" corp., owners are taxed twice. First on corporate
profits and then on personal income when profits are distributed
as dividends. The situation is somewhat improved with an "S"
corporation, in that corporate profit can flow through personal
income, thereby subjecting it only to single taxation. The problem
with "S" corporations is that they are fairly restricted
and therefore lack flexibility.
NOTE: With an LLC, profits are taxed as they would be in a partnership,
only once, at the personal level.
A
key feature of incorporation is the "corporate shell"
placed around assets owned by the corporation, making them separate
and distinct from personal assets. With corporate status, and
individual's personal assets are for the most part protected.
In a partnership, this protection is given up, usually to secure
the tax advantages of partnership.
NOTE: The exciting thing about an LLC is that it provides full
corporate protection even while giving the tax advantage of
a partnership.
A key feature of incorporation is the "corporate shell"
placed around assets owned by the corporation, making them separate
and distinct from personal assets. With corporate status, and
individual's personal assets are for the most part protected.
In a partnership, this protection is given up, usually to secure
the tax advantages of partnership.
NOTE: The exciting thing about an LLC is that it provides full
corporate protection even while giving the tax advantage of
a partnership.
Does
an LLC provide shareholder flexibility?
In
a "C" corporation anyone, or any number of entities
may be shareholders.
In an "S" corporation, there may be no more than 70
shareholders, and no foreign or corporate shareholders. In a
partnership there must be at least one "general" partner,
who has full liability and any number of "limited"
partners, who have liability limited to their investment, but
may also have no involvement with the management of the company.
Even this degree of protection is not allowed in every state.
With a Limited Liability Company there may be any number of
members and they may be foreign or they may be corporate.
NOTE: An LLC has all the flexibility of a "C" corporation
that is lacking in an "S" corporation and a partnership.
Is
an LLC widely accepted?
44
states (including Delaware) have adopted them and about 20,000
have been formed so far. Business Week calls it a "safer
strategy for small business."
To
request this form click Here
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The
data herein has been compiled from various public sources.
The Onyx Group, LP attempts to provide as accurate information
as possible, but is not responsible for actual, consequential
or incidental damages |
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