Consider the Tax Implications of an LLC Before You Create One
You’ve decided to open your business and now you’re facing the daunting task of structuring it as a corporation. Many entrepreneurs opt to form limited liability companies or an LLC. Currently, every state, including the District of Columbia, allows single-owner LLCs. To create an LLC, you ll need to file the proper documents with the appropriate state agency and pay filing fees. But before you make a decision on a corporate structure, you should first understand the tax implications of an LLC. LLC’s shield the personal assets of their owners. This means that if your company has bad debts, banks and other lenders cannot seize your personal property. The only exception is if you signed a personal guarantee to finance your business. Your LLC protects your assets as a corporate structure does, but an LLC has more management flexibility and taxes are often simpler. The tax implications of an LLC differ from those of corporations.
