subject: Be Aware of Single Owner LLC Tax Problems [print this page] Be Aware of Single Owner LLC Tax Problems
A selection of popular activities these days, the company is a company with limited liability. If you are a sole proprietor, you must understand something of a fiscal problem.
The limited liability company has really revolutionized the world of business. The company provides surprisingly little protection against liability of a company, without any formalities. From a fiscal point of view, may also be taxed as a partnership with one important exception. Tounderstand, is the exception, we must take a step back in time.
To the surprise of many, the limited liability company is a relatively new one. It 'was amazing, created by Wyoming in 1979. While politicians have said they are trying to be friendly to businesses, in reality, a way to generate more tax revenue to be found. Is there a better way to a new unit that was flexible for small businesses to create perfectly? Well, he did not deny that he had foundsomething, but there was no problem.
From 1979 until the late '80s, LLC, more or less unnoticed. Why? The IRS is the time to understand, taken as taxed. It would be like a company or a partnership will be taxed? If a new section of tax code was created for them? The IRS has never found a good response, so as to enable people to decide whether an association taxed as a corp. Most took the Partnership and all went well.
Memberare jealous of each other. If the IRS has finally understood how he started the company with limited liability, all other States now, the passage of the legislation, LLC formed in their state so that charges would be. Most laws, including allowing a person to form the unit. This led to immediate problems is presented, most of them sole proprietorships with limited liability partnership, the owner returns.
A partnership is a transaction between two or more people. This is a fundamental legal principle thatforever. It is also enshrined in the tax code. You can imagine, the problem is. How can a single owner LLC, a partnership files a tax return. One person!
After some discussion, the IRS has made its decision. A single owner LLC should be taxed as a sole proprietorship. King certainly ask, why should it? Well, this decision, you should not pay for their 15.2 percent tax if you are the proud ownera single owner LLC. Most people do not know when they decide to form a unit and get a rude awakening when it's time to pay Uncle Sam
If you want a single owner LLC, there is no objection. Make sure you understand, pay self-employment taxes owed and the money.
