![]() If taxed as a disregarded entity, your LLC pays you a "draw," not a salary or wage. Standard single-owner LLCs file no separate business tax return, so they're called a disregarded entity. Sole proprietorships are a type of pass-through business where the business pays tax on profits through your personal tax returns. By default, they're taxed like sole proprietorships. Single-owner LLCs are 100% owned by one person or, depending on the state, one married couple. The best tax treatment option maximizes your tax savings when you file your small business taxes. ![]() You may change your LLC's federal tax classification to either an S corporation or a C corporation. When you create an LLC, it's automatically taxed as a sole proprietorship or as a partnership, depending on the number of owners, called members. LLCs also offer business owners more flexibility in how they're taxed. Many business owners choose to start their businesses as limited liability companies (LLCs) because the business structure offers certain legal and financial protections.
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