[KassiusKlay]

My friend recently asked me what the tax benefits of an llc are. I tried to explain to him but I think I confused him. Can someone help me with this? I am knee deep in studying for FAR and am really having a hard time finding something I can relay to a non accounting/tax person. Haha he currently has to file a 10-99. I know this question is very broad but any help would be appreciated, a link or whatever. Thanks.

Form is temporary, class is permanent.

Audit 4/19/12 - 77
BEC 5/31/12 - 75
FAR 8/30/12

[jeff]

People don't do LLCs for tax purposes – they do them for liability protection.

There's some tax strategery that comes into play with a S-Corp vs LLC in regards to self-employment tax.

[gans555]

Well to be very brief, an llc is kinda like a partnership. The profits and losses flow through. However, an LLC can have just 1 owner (member) Also, the members are not personally liable whereas a general partner is. Also, llc allows foreign ownership

[UnderemployedCPA]

and jeff beats me to the punch…LLCs are all about asset protection, which is cute in the age of joint and several liability.

[KassiusKlay]

Love it. Thanks guys!

Form is temporary, class is permanent.

Audit 4/19/12 - 77
BEC 5/31/12 - 75
FAR 8/30/12

[Anonymous]

Check local state laws as California taxes some LLC's with an LLC fee in addition to the “minimum tax.”

If it pertains to your friend, he/she may want to use a s-corp instead.

[jtcali]

LLC's can share their profits and losses with members based on any % they want, regardless of ownership % . S-Corps have to share profits and losses based on stock ownership %. any profit that flows through to the personal return from an LLC is subject to self-employment and income tax. any profit that flows through from an S-Corp is only subject to income tax. However, S-corp owners are required to take a salary.

[jtcali]

@cpham4 or you can form an LLC and file as an S-Corp, thus avoiding the LLC fee.

[Author]

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