A Limited Liability Company (LLC) could be just the right structure for your business. If you are a sole proprietor who is outgrowing and outpacing your early years, then consider the flexibility of an LLC.
Owners are known as “members.” In most states, “single-member” LLCs are permitted, and there are few restrictions on ownership or maximum number of members. An LLC can offer a greater level of protection for your personal assets but not be as confining or complicated as a corporation.
What about Taxation?
The IRS treats an LLC in one of these ways, depending on choices made when setting up an LLC and the number of members:
• corporation
• partnership, or
• as part of tax return of the LLC’s owner (a “disregarded entity”).
Generally an LLC with at least two members is classified as a partnership for federal income tax purposes. The LLC can elect to be treated as a corporation but it must be an affirmative decision. The IRS treats an LLC with only one member for income taxes as “an entity disregarded as separate from the owner (but it becomes a separate entity for employment and certain excise taxes).” An LLC that wants to be treated as a corporation can affirmatively elect to do so.
Unsworth LaPlante, PLLC in Vermont has the experience to help you with Business Planning. Then you can establish the business structure that is just right for your company, regardless of its size.
Stephen Unsworth
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