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What Is An LLC? August 31, 2009

Posted by Julie Duriga, CPA in Uncategorized.
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j0441315An LLC stands for Limited Liability Company.  What is an LLC?  It is the most flexible but confusing entity to most small business owners.    There is no federal tax form for an LLC.  Although the IRS recognizes the entity, there is no specific tax form for the LLC.   As a small business owner, it is critical to know how your tax return is going to be filed.

 The LLC is filed at the state level with your Secretary of State.  When you file for your EIN number with the IRS, you still get to pick if you are going to be a Sole Proprietor, a Partnership or an S Corporation.  If you are choosing to be a Sole Proprietor or a Partnership you are required to file form 8832 with the IRS.  If you are choosing an S Corporation, you are required to file form 2553 to let the IRS know that you are choosing an S Corporation status. 

To make this a bit clearer, in the CPA business, the conversation almost always goes something like this. 

CPA-“Oh, you are an LLC…what is your filing status?”

Customer-“I am an LLC.”

CPA-“What status did you choose with the IRS to let the IRS know how you will be filing your tax return?”

Customer-“I am an LLC.”

And on and on we go…

When you visit your accountant and you have filed your LLC paperwork you will save a great deal of time, money and confusion when your accountant asks, “What is your filing status?” and you know the answer.   You can proclaim loudly and say, “I am an LLC filing as….”  Remember your three choices are Sole Proprietor, Partnership or S Corporation. 

Some attorneys will help you make the choice of what your filing status you should be, other attorneys will file the LLC paperwork and then tell you that you need to go see your accountant about your filing status.

Visit us at our website to get your free E-Book titled “How Do I Pay Myself? The Entrepreneur’s Guide to Building a Business AND Bringing Home the Dough.”  www.UniversityForBusiness.com

We also offer a really cool twenty minute video about how running your business affects your bottom line. We use islands, cars and bridges to demonstrate the movement of profits and losses between your personal and business bank accounts. This immediate download is avaialble for only $6.99. Twenty minutes with a CPA for only $6.99, what a deal!

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