Limited Liability Companies (LLCs)

Understand the key features and tax classifications of Limited Liability Companies (LLCs). This guide provides comprehensive information on the formation, ownership, and operational requirements of LLCs, as well as the different ways they can be taxed. Learn about the benefits of limited liability protection, flexible income allocation, and the ability to choose between being taxed as a partnership, corporation, or disregarded entity.

Highlights:

• Formation and Ownership: Unlimited number of members, including non-U.S. citizens, and ownership by corporations, partnerships, trusts, or other LLCs.

• Tax Classification: LLCs can be classified as a partnership, corporation, or disregarded entity for federal income tax purposes.

• Self-Employment Tax: Members may be subject to self-employment tax on income received from the LLC.

• Operating Agreement: Importance of having an operating agreement to outline the LLC’s financial and operational structure.

• Liability Protection: Provides limited liability for members, separating personal assets from business debts and obligations.