12Law Arrow 12Law Arrow  Easy Questions  
12Law Arrow 12Law Arrow Instant Legal Documents
 
Get the Florida Legal Documents You Need in Only Minutes!
  • Written by expert Attorneys
  • Guaranteed for your State
  • Personalized for your situation
  • Finish and print in minutes!

Pros and Cons of Taxation as an LLC in Zip Code 33304

Pros and Cons of Taxation as an LLC in Zip Code 33304


The critical ingredient is getting off your butt and doing something. It's as simple as that. A lot of people have ideas, but there are few who decide to do something about them now. Not tomorrow. Not next week. But today. The true entrepreneur is a doer, not a dreamer.
 
- Nolan Bushnell


A Limited liability company (LLC) is a "pass-through" entity. The profits and losses of the company pass through the business to the LLC owners or members who report the information on their personal tax returns.

Single-Owner LLC

For tax purposes, the IRS treats one-member LLCs as a sole proprietorship. This would mean no taxes for the LLC and no filling of income tax returns with the IRS. Being the owner of an LLC, you will be required to submit a report of the profits or losses on Schedule C with the Form 1040 tax return. When you decide to leave some of the profits in the company's bank account at year's end for future expenses, you will still pay the income tax for that particular money.

Multi-Owner LLCs

Two owners of an LLC, will be treated by the IRS as a Partnership. Like the one-member LLC, a co-owned LLC does not pay taxes on business income, but the members will pay taxes based on their share of profits to be reported on their personal income tax returns together with the Schedule E attached. This sharing of profits and losses is called distributive share and should be indicated in the LLC operating agreement.


How an LLC Divides Profits

Profits are distributed to each member depending on his/her percentage interest in the business. If a person owns 60% of the company, he/she will get 60% of the profits and losses. If the company decides to divide up the profits and losses in a way that is not proportionate to the members' percentage interest, it is called a "special allocation."

How to Tax a Member's Distributive Share

The IRS treats LLC members as though they receive their entire distributive share of each year's profits regardless of how much money is actually paid out. The purpose of this IRS rule is for the LLC members to be taxed based on their rightful share of the earnings, even if some of the money is reinvested in the LLC for expansion of the business.

File Form 1065 with the IRS

A co-owned LLC is not required to pay its own income tax but is required by the IRS to file Form 1065. This is an informational return reviewed by the IRS to determine if the members have reported their income correctly. The LLC is also required to provide its members with a Schedule K-1 showing each member's share of profits and losses. The LLC members report this information on their individual Form 1040 with the Scheduled E attached.


Electing Corporate Taxation

An LLC can choose to be treated like a corporation for tax purposes by filing IRS Form 8832. This is helpful if the LLC regularly needs to keep a large amount of profits or "retained earnings" within the company. Corporate taxable income is lower than individual income tax that is usually applied to LLC owners. This can save you and the co-owners money in overall taxes.

Estimating and Paying Taxes

Withholding taxes is not practiced in an LLC because the owners are considered self-employed. With this regard, all LLC members will be responsible for setting aside money intended for taxes based on their share of the profits. They must estimate the amount of money they owe the IRS for the year (and the state if there is a state income tax) and make quarterly payments in April, June, September, and January. Self-Employment Taxes

Since LLC members are considered self-employed, they make Medicare and Social Security payments directly to the IRS on the earnings they derive from the LLC. Owners who are active in the day-to-day operating of the business pay these taxes on their distributive share. The owners who are investors with no operational responsibilities may be exempt from paying these self-employment taxes from their share of the profit.



Expenses and Deductions

What can be considered as deductible expenses that you can "write off" from your business income? Identifying these can significantly lower the profits that you must report to the IRS. Deductible expenses include:

  • Startup costs
  • Automobile and travel expenses
  • Equipment costs
  • Advertising and promotion costs
  • State Taxes and Fees

    In most states the LLC does not pay a state tax, but LLC members pay individual state taxes on their tax returns. In addition, depending on the state where the LLC is located, there may be an annual LLC fee that is not income related. This is known as a "franchise tax", "annual registration fee", or "renewal fee."

     
    Download & Print a Free FL Last Will Personalize This Document
    Page 1
     
    Download & Print a Free FL Living Will Personalize This Document
    Page 1
      Answer Easy
    Questions
    answer simple questions online step by step
    Easy Questions, Instant Documents
    • Finish in Minutes
    • Download Immediately
    • Written by Attorneys
    • 100% Guaranteed
      Get Instant Legal
        Documents

    Print, save or email your finished legal document immediately!
    Last Will & Testament
    Related Legal Services near Zip Code 33304
    Eliot Lupkin
    1975 E Sunrise Blvd Ste 509
    Fort Lauderdale, FL 33304
    (561) 392-9935
    General Practice Attorneys, Attorneys, Criminal Law Attorneys, Legal Service Plans
    Marchetta Jr Arthur E
    915 Middle River Dr # 600
    Fort Lauderdale, FL 33304
    (954) 566-9889
    Criminal Law Attorneys, Attorneys
    Rotella Gary J & Associates PA
    1500 N Federal Hwy Ste 250
    Fort Lauderdale, FL 33304
    (954) 565-9809
    Attorneys, Business Litigation Attorneys, Business Law Attorneys
    Thomas & Pearl PA
    2404 NE 9th St
    Fort Lauderdale, FL 33304
    (954) 563-9225
    Employee Benefits & Worker Compensation Attorneys, Attorneys
    Laura F Morgan
    1322 NE 4th Ave
    Fort Lauderdale, FL 33304
    (954) 728-9220
    Real Estate Attorneys, Attorneys, General Practice Attorneys
    Bosco Joseph A
    746 NE 3rd Ave
    Fort Lauderdale, FL 33304
    (954) 888-8998
    Criminal Law Attorneys, Attorneys, General Practice Attorneys
    Wilton Manors Chiropractic
    2450 NE 13th St
    Fort Lauderdale, FL 33304
    (954) 537-8898
    Drug Abuse & Addiction Centers,  Nutritionists,  Physicians & Surgeons, Weight Loss Management,  Au
    The DUI Law Office
    707 NE 3rd Ave Suite 201
    Fort Lauderdale, FL 33304
    (954) 514-7078
    Criminal Law Attorneys, Attorneys, DUI & DWI Attorneys
    Moore Law, P.A.
    707 NE 3rd Ave Suite 201,
    Fort Lauderdale, FL 33304
    (954) 656-6230
    Criminal Law Attorneys, Attorneys
    Family Services
    504 NE 13th St
    Fort Lauderdale, FL 33304
    (954) 523-6056
    Immigration Law Attorneys, Immigration & Naturalization Consultants, Attorneys
    Alitowski & Moore
    707 NE 3rd Avenue Suite 201
    Fort Lauderdale, FL 33304
    (954) 523-5333
    Accident & Property Damage Attorneys, Personal Injury Law Attorneys, Attorneys
    Poseidon Enterprise
    1973 Sunrise Key Blvd Ofc 753
    Fort Lauderdale, FL 33304
    (954) 760-4501
    Corporation & Partnership Law Attorneys, Legal Service Plans
    Buch Orlando
    1975 E Sunrise Blvd # 501
    Fort Lauderdale, FL 33304
    (954) 462-4120
    Attorneys, General Practice Attorneys
    Bernstein Michael A PA
    1140 Bayview Dr
    Fort Lauderdale, FL 33304
    (954) 561-4000
    Arbitration & Mediation Attorneys,  Attorneys,  Mediation Services,  Arbitration Services
    McDonald Sarah D
    1500 N Federal Hwy
    Fort Lauderdale, FL 33304
    (954) 566-1234
    Administrative & Governmental Law Attorneys, Attorneys
    Mastriana F Ronald
    1500 N Federal Hwy
    Fort Lauderdale, FL 33304
    (954) 566-1234
    Environment & Natural Resources Law Attorneys, Attorneys
    Hoffman Stephen V
    1500 N Federal Hwy
    Fort Lauderdale, FL 33304
    (954) 566-1234
    Real Estate Attorneys, Attorneys
    Fred Land Fulmer Law Office
    2455 E Sunrise Blvd
    Fort Lauderdale, FL 33304
    (954) 763-1052
    Personal Injury Law Attorneys, Insurance Attorneys, Attorneys
    Connie Kaplan, P.A.
    721 NE 3rd Avenue Suite B
    Fort Lauderdale, FL 33304
    (954) 357-0957
    Family Law Attorneys,  Divorce Attorneys,  General Practice Attorneys,  Divorce Assistance,  Bankrup
    Berzner Steven L
    1040 Bayview Dr # 605
    Fort Lauderdale, FL 33304
    (954) 566-0877
    Arbitration Services,  Attorneys,  Family Law Attorneys,  Divorce Attorneys,  General Practice Attor
    Champagne & Surin PA
    480 NE 13th St
    Fort Lauderdale, FL 33304
    (954) 463-0709
    Consumer Law Attorneys, Attorneys
    Braverman & Hymowitz
    625 NE 3rd Ave
    Fort Lauderdale, FL 33304
    (954) 524-0505
    Family Law Attorneys,  Attorneys,  Divorce Attorneys,  Criminal Law Attorneys,  Legal Service Plans
    Murdoch, Robert E
    2455 E Sunrise Blvd
    Fort Lauderdale, FL 33304
    (954) 463-0100
    Real Estate Attorneys, Attorneys, General Practice Attorneys
    Johnson Anselmo Murdoch Burke Piper & Hochman PA
    2455 E Sunrise Blvd
    Fort Lauderdale, FL 33304
    (954) 463-0100
    Attorneys,  Real Estate Attorneys,  Contract Law Attorneys,  Personal Injury Law Attorneys,  Employm
    12Law.com   |  NASHVILLE, TN USA   |  CONTACT US