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The Flexibility of the LLC

The LLC is a state recognized legal entity for conducting business.  It works as well for the small individual business owner who is simply seeking to limit legal liability as for a larger business with many owners. The LLC also facilitates changes in its tax classification.

The following example demonstrates the utility and flexibility of an LLC. A small business owner registers his business as an LLC to obtain the protection of limited legal liability. Initially the business is too small to take on the expense of filing its own separate return so the business owner elects to be taxed as a sole proprietor. The business owner needs to file no forms to make this election as the default tax classification for a single member LLC is a sole proprietor.  This classification allows the business owner to report the transactions for his business on schedule C which is filed along with his form 1040.

If the number of owners increases to more than 1, the tax classification changes to a partnership, which has to file form 1065 annually along with K1s for each owner. 

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The Business Tax Calendar

Knowing these dates can save you money

January 31st- Last day to mail out W2s and 1099s for employees and independent contractors, as well as file forms 941, 940, and UCT6.

February 28th- Last day to file W2s and 1099s with the IRS

March 15th - Last day to file federal business returns or request an extension of time to file for calendar year businesses. Many new businesses mistakenly think that business returns are due April 15th, but in reality they are due March 15th, or 2 and ½ months after the fiscal year end, and penalties are charged for late filed returns. 

April 1st - Last day to file tangible property tax returns. This is a county return to be filed by businesses with at least $25,000 of furniture, fixtures and equipment. Businesses need to file this return for the first year of operation even if they have less than the $25000 in tangible property.

May 1st -last day to

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The Advantages and Disadvantages of Being Self-Employed

The Advantages and Disadvantages of Being Self-Employed

The Advantages and Disadvantages of Being Self-EmployedThere are several advantages that come with being self-employed. You get to be the boss, dictating what you do, when you do it, and even where you do it from. There are, however, also a variety of drawbacks to being self-employed. Understanding the pros and cons of self-employment, can help you to determine whether you are ready to strike out on your own or not.

When you’re self-employed you are the one in charge. For most people that may sound like a huge advantage, but it can actually be a drawback, depending on your personality. While you get to determine what you do each day, that doesn’t mean you’ll always make a wise

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Why It Is Important To Incorporate Your Small Business

Why It Is Important To Incorporate Your Small BusinessThere are a number of reasons why it is important for you to incorporate your business. While this may seem like a complex and daunting process at first, it can be relatively simple, and has the potential to provide you and your company with a number of important benefits. It is also a way of protecting yourself from problems that can arise through the normal course of doing business, acting as a barrier of protection between you as a person, and the legal entity that is your business.

 

There are several different types of corporations that you can choose to list your business under. The C Corporation is the most common, but it is also the most complex, and is generally only a good idea if you already have a large business base in place. An

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What is a limited Liability Corporation (LLC)?

A limited liability Corporation (LLC) is the most popular business structure for good reasons.  The LLC, like a regular corporation, provides business owners protection for their personal assets against claims on the business, but still allows the business the flexibility of operating like a partnership or a sole proprietorship.  The LLC is suitable for many types of business and has fewer restrictions than many other business structures.  The LLC can have a single member or an infinite number of members.  Members can include individuals, corporations, other LLCs, and foreign entities.  There are only a few types of businesses that are not allowed to operate with the LLC structure such as banks and insurance companies.

Taxation of an LLC

For tax purposes an LLC must be classified as a sole proprietorship, a partnership, or a corporation.  This is another aspect of the flexibility of LLCs. A single member LLC may choose to be classified as a corporation or as a sole proprietorship.  An LLC with more than one member may choose to be classified

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