Single Member LLC is the choice most taxpayers who are trying to open a business. This decision could cause you issues in the coming months. We are going to show you how to avoid this from starting. Solutions to what can be done once you start your business.
Let’s start with why your open your Single member LLC. The first point you went out and did some research on how to start your business. Most of them said that opening an LLC is your solutions. So you went to your state’s website and open your business. You think that why spend the money to hire a professional to save a few bucks. All of my research said it was simple and can do it.
You are so happy that your dreams are coming true.
Most startups think that once you open your company it’s done and you can start building your business. Business owners got it wrong when they have this mindset. All of your issues will happen down the road.
Single Member LLC Effect your business
Issues with Single Member LLC will occur in two parts of your business. Filing your tax return is one area that will go wrong. Second part is all of the protection and tax advantages of LLC does not occur.
Most small business starts up do not understand what an LLC definition. It’s a Limited Liability Partnership. So partnership by definition is two or more persons. When you are a single member LLC, there is only one shareholder and does not qualify.
IRS form 2553
There is a solution to this problem. You go to the IRS and download a 2553. After you fill out the form and mail it in will make perfect legal to be a single member LLC. All the benefits will occur once this is filed to the IRS
Asset protect and tax advantages does not occur until you file the 2553.
If there are any issues with lawsuits, your single member LLC will not cover your assets or tax liabilities. There are no IRS forms for how you started your business. All income and deductions go straight to your return. So there are not tax advantages since personal returns tend to get audit more.
If your LLC get sued, it goes straight back to you and not your company. The reason for the LLC is to save money on your tax returns and asset protection.
Paying a firm to open start your business is your solution. It could cost you a few extra dollars. In the end you will save time and money. Protecting your assets and tax saving is well worth the extra it going to cost you.
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