Best kept secrets about LLC’s

LLC is an acronym for Limited Liability Company and in comparison to all other business structures it is the newest.

 Despite being somewhat fresh to the commerce scene it continues to be the most popular choice among business owners. Winning the popularity contest among business owners is one thing, but getting a nod from our country’s tax system is something different.   You’ll be hard pressed to find much said about LLCs in the voluminous tax laws. Just go ahead and look. You won’t find anything about LLC’s. Oh sure…corporations, partnerships and trusts all get their own space but the LLC is a fence without a home.

But being a nomad has its privileges – like flexibility.  Since the LLC isn’t part of any family, the IRS asks a new baby LLC to pick a family. A newly formed LLC can choose to be treated like a sole proprietor, a corporation or a partnership.

So why would you be an LLC when you could just be one of the structures the LLC has to behave like anyway?

 It depends. For starters, NOBODY should be a sole-proprietor. A sole-proprietor has the maximum tax and liability exposure. Enough said.
The IRS has tried to make your decision easier if you don’t need all the bells and whistles of a corporation or partnership.  If you organize as a single-member LLC, meaning you’re the only member of the LLC, then you can be treated as a disregarded entity for tax purposes.  Did i just lose you? In other words, you get to file your taxes just like a sole-proprietor but for all other purposes, like liability protection, you’re a LLC.  It’s the best attempt the IRS can make to facilitate an easier administrative process.

For most small businesses it would be hard to distinguish much difference between the operation of a corporation or an LLC, so sometimes it just comes down to the cost of legal and filing fees.

The most head scratching will generally happen when comparing an LLC to a partnership. A thorough comparison is worth your time here ESPECIALLY if personal guarantees or loans are involved. There are distinguishable differences and you should take the time to review them before making a decision.

If you want to find out if your business structure is the most efficient for you then give us a call.

Cheers,

Trevor

It's time to make your numbers mean something to you.

 

Trevor has been such an asset to my business. He is always thinking long term and setting my business up for growth and to achieve my goals. As a small business owner it's great to have the ability to outsource my accounting to someone I trust and who always has my best interests at heart. 

Julie

Julie's Eats & Treats

Meeting with Trevor provided clarity for us in determining our next steps for growing our business.  His ability to help us remove the emotions and look at the data, gave us an organized, goal oriented plan of action.  Trevor's calm, supportive demeanor made us feel capable and ready to take our next steps. 

Cate & Tony

Empowered Living Company

We came to the firm for typical business accounting and tax service.  We went through an audit and we were so thankful for the records the firm kept over the years, but most surprising to us was how much Trevor cared about us and seeing our business succeed.  He consulted us as if our business was his own.  It is apparent to us the value Trevor's advisory services has for our business.  He has come right alongside us in strategy and planning with a true care to see us and our business succeed.  He brings a valuable financial and tax critical thinking skill set that has had a direct result in the growth of our business.

Ashley & Noelle

Legend Hockey Elite

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303 Atlantic Avenue

Morris, MN  56267

 

Phone 320.589.4300

Fax 320.589.4308