Disadvantages

  • Taxing jurisdictions outside the US are likely to treat a US LLC as a corporation, regardless of its treatment for US tax purposes, for example if a US LLC does business outside the US or a resident of a foreign jurisdiction is a member of a US LLC.

  • The principals of LLCs use many different titles—e.g., member, manager, managing member, managing director, chief executive officer, president, and partner. As such, it can be difficult to determine who actually has the authority to enter into a contract on the LLC's behalf.

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Business Facts

  • There are 28 million small businesses in the U.S. -- which outnumber corporations 1162 to 1.

  • 70% of small businesses are owned and operated by a single person.

  • Small businesses employ 57% of the country's private workforce.

  • Small businesses pay 44% of U.S. payroll.

  • Only 50% of businesses survive five years.

  • Immigrants make up 12.5% of small business owners nationwide.

  • 60 to 80% of all new jobs come from small businesses.

For further assistance with filing a LLC or questions regarding the process please contact our specialists at 888-300-3039.

A limited liability company is a hybrid type of legal structure that provides the limited liability features of a corporation and the tax efficiencies and operational flexibility of a partnership.

Advantages

  • Choice of tax regime. An LLC can elect to be taxed as a sole proprietor, partnership, S corporation or C corporation , providing for a great deal of flexibility.
  • A limited liability company with multiple members that elects to be taxed as partnership may specially allocate the members' distributive share of income, gain, loss, deduction, or credit via the company operating agreement on a basis other than the ownership percentage of each member so long as the rules contained in Treasury Regulation (26 CFR) 1.704-1 are met. S corporations may not specially allocate profits, losses and other tax items under US tax law.
  • Limited liability, meaning that the owners of the LLC, called "members", are protected from some or all liability for acts and debts of the LLC depending on state shield laws.
  • Much less administrative paperwork and record keeping than a corporation.
  • Pass-through taxation (i.e., no double taxation), unless the LLC elects to be taxed as a C corporation.
  • Using default tax classification, profits are taxed personally at the member level, not at the LLC level.

Limited Liability Corporation (LLC)