4 Tax Possibilities for Your LLC
From the forum:
The limited liability company (LLC) is a hot business structure for startups right now for good reason. It offers all the personal-liability protection without the red tape, paperwork and formalities that can be burdensome for a startup, a small business or a solo entrepreneur.
After settling on the LLC as the legal structure, many small-business owners are surprised to learn they have to decide how to be taxed. This is a big decision, since taxes are probably what drove you to choose this legal structure in the first place.
Because the LLC is an entity created by state statute (and not the federal government), it has flexibility for federal tax treatment. A single-member LLC can be taxed as a sole proprietorship or a corporation (either a C corporation or an S corporation). A multi-member LLC can be taxed as a partnership or a C corporation or an S corporation.
Flexibility is a good thing, but you need to know which LLC option is right for you. Here are the four federal tax classifications available for the LLC.