A limited liability company (LLC) is a relatively new form of legal business structure. An LLC, as its name implies, offers limited liability protection to its owners, or members as they are called. There are also tax advantages to individual members of LLCs who are not double-taxed as a result of the incorporation. This article will help you learn more about how to make your business an LLC.
For help with setting up a new business as an LLC, consult with a small business counselor available at your local community college. If you are converting an existing business into an LLC, consult with an accountant to determine whether there will be tax implications for the current year.
Determine who the members of your LLC will be. Members are owners of the company and can be individuals or other corporations. An LLC can also be a single membership in most states.
Secure an Employer Identification Number (EIN) from the Internal Revenue Service (IRS). You will use this number for tax purposes.
File articles of organization with your state’s Department of the Secretary of State. The filing fee ranges from approximately $100 to $200, depending on your state’s requirements.
File the appropriate IRS paperwork. If you are operating as an individual, you will file a Schedule C, E or F in addition to your regular 1040 form. However, for multiple members or if members are corporations, other forms apply. Check with the IRS or your accountant to determine the appropriate filing status for your LLC.
According to the IRS, “Employment tax requirements apply to LLCs in much the same way as other types of businesses.”
Consult with experts before setting up your LLC to ensure you are in compliance with state and federal laws.