After having done some research on the best corporate structure for your new small scale business, you have decided to register your new business as a Limited Liability Company (LLC). An LLC is a type of legal business entity that provides business owners with a lower level of liability and LLC owners face lower caps on company actions and debts. Like every business entity, an LLC has its advantages and disvantages.
- Members of an LLC are not personally liable for actions of the company, meaning that the members’ personal assets such as their homes, cars, bank accounts, investments, and etc. are protected from creditors seeking to collect from the business.
- The profits go directly to the LLC members without being taxed by the government on the company level. Instead, they’re taxed on member’s federal income tax returns which makes filing of taxes easier. And if the company loses money, it will reflect on the members’ tax return and lower their tax burdens.
- An LLC is member-managed by default unless otherwise stated.
- If the member or members is/are found to have run the business fraudulently that resulted in losses for others, which in this case, the member or members’ personal property might not be protected.
- Members of LLC could be liable for self-employment tax.
- If a member leaves the company for whatever reasons, the LLC has to be dissolved and the remaining members will be responsible for any legal or financial obligations in the process of terminating the business. And if the members still want to do business, they will have to start a new LLC from scratch.
Even though the registration procedure of an LLC is not particularly a complex one, there are certain steps for new business owners to follow to ensure that your company is properly formed. The application for forming an LLC can be done online or it can be done through filling of a proper form or it can done in person.
As a new employer and a first timer in filing the application, if you need help with the application, you can get expert help from GovDocFiling.com. These experts can help employers process their application while the new employers get to concentrate in the setting up of their business.
An employer has to apply for a tax ID number for filing for their business tax returns and also for the purpose of paying their employees. This tax ID number or the Employer Identification Number (EIN) is a 9-digit number assigned by the Internal Revenue Service (IRS) to businesses for the purpose of identification. An EIN once issued to an employer, it will not be reissued and it does not expire.