There are advantages to having a Limited Liability Company tax status. This status is pretty new, since most states have only begun recognizing it since around 1999. Owners of an LLC are referred to as members.
Limited Liability Companies have caught on rapidly since they offer the advantages of very flexible tax treatment, versatility and simple operation, and they offer the most tax liability insulation.
For these reasons the LLC status has become a favorite of small business owners, particularly attorneys.
Single member Limited Liability Companies had been barred in some states, but now all fifty states recognize the legitimacy of single owner Limited Liability Companies.
No tax is paid when you transfer a sole proprietorship into an LLC.
To start a Limited Liability Company, you must register with your state’s office of the Secretary of State and pay a fee to file an article of organization. Articles of organization are generally easy to file and require only the very basic information about your business, such as its name, location, and what it does.
There are fee-based websites that will set everything up for you for the cost of the filing fee, plus their services. There are also instructional books and software available to help you file an article of organization on your own. Fees for the service can run around $150, while state filing fees start at about $50 and can go above $500, depending on the state and the circumstances.
All states have different qualifications and requirements when you file an article of organization. In New York State, for example, you must publish a public notice of formation in the local newspaper. This could cost as much as an additional $100 to $200.
You are usually required to name someone as the registered agent for your Limited Liability Company. This registered agent is basically the party who is sent tax and legal notices. If you do not wish to register yourself as the agent, there are any number of companies that will act on your behalf, as your registered agent, for an annual fee.
When choosing between a Limited Liability Company and a corporation as the structure of your business, the cost of filing is inconsequential in most states. While a Limited Liability Company filing is almost always less expensive than a corporation filing, it is generally a difference of only about $100. So, when choosing whether to structure your business as an LLC or a corporation, there are many more pressing issues to consider other than the filing cost.
When you start your own business, you are looking for a tax effective form of business entity. LLC is a very convenient vehicle to achieve your objectives. There are many tax benefits which you can claim under LLC, Chintamani Abhyankar explains.
Chintamani Abhyankar, is a well known expert in the field of finance and taxation for last 25 years. He has written many books explaining inside secrets of the magic world of personal finance. His famous Tax eBook [http://www.planningyourtax.com] “Stop donating your money to IRS” which is now running in its second edition, provides intricate knowledge and valuable tips on personal finance and income tax.