[Company Logo Image]


Home Up Contents SEARCH 

IRS Enrolled Agent Logo

Why an Enrolled Agent
Certifying Acpt Agent
Free Services
Email Advice
Track Your Tax Refund
Tax Glossary
Neat Facts & Stats
1913 US Form 1040
Questions & Library
Partner Profiles
Tax Calendar
Reasons to Call Us
Links Of Interest
Privacy & Disclosure

What Are Limited Liability Companies (LLC)?

A Limited Liability Company (LLC) is an incorporated entity which is usually treated, for Federal tax purposes, as a limited partnership. The shareholders (called "members") are issued Form 1065, Schedule K-1, from which they report their share of the LLC's income on their personal tax return.

Advantages of LLC's:

  • Same Limited Liability as corporations
  • S-Corp restrictions on number of owners does not apply
  • Can be owned by corporations

Disadvantages of LLC's:

  • Must have at least two owners (S-corp can have one owner.)
  • Earnings may be subject to SE Tax
  • Income tax cannot be deferred by retaining profits.
  • Life of LLC may be limited.

LLCs are very much the "new kid on the block" in tax law, and there isn't very much in the way of case law on how to handle unusual situations. The laws governing LLCs vary from state to state, and not all states will recognize a "foreign" (from another state) LLC. It would be wise to seek out professional guidance if you are contemplating this form of business enterprise.


Return to Corporate Reports


  [Back] [Home] [Up] [Next]

We do not offer legal advice. All information provided on this website is for informational purposes only and is not a substitute for proper legal advice. If you have legal questions, we recommend that you seek the advice of legal professionals.

Tax Disclaimer: To ensure compliance with IRS Rules, any U.S. federal tax advice provided in this communication is not intended or written to be used, and it cannot be used by the recipient or any other taxpayer (i) for the purpose of avoiding tax penalties that may be imposed on the recipient or any other taxpayer under the Internal Revenue Code, or (ii) in promoting, marketing or recommending to another party a partnership or other entity, investment plan, arrangement or other transaction addressed herein.

Copyright 2017 Wink Tax Services / Wink Inc.
Last modified: January 30, 2017