The following are a few of the advantages of the LLC form of business organization: (via author of article at Entrepreneur dot com) -An LLC allows for an unlimited number of members; however, if the LLC has just one owner, it will be taxed as a sole proprietorship. -The LLC allows for the special allocation of profits--the disproportionate splitting of member profits and losses (in different percentages than their respective percentages of ownership). This means that members can enjoy the benefits of receiving profits (and writing off losses) in excess of their individual ownership percentage. -The members enjoy limited liability, which means they are personally protected from any liability of the LLC and successful judgments, as well as from the LLC itself. Managing members share of bottom-line profit is considered earned income because the managing member is considered to be an active owner--therefore qualifying the managing member for special fringe benefit treatment. -Members are compensated using either distributions of profit or guaranteed payments. A distribution of profit allows each member to pay themselves by merely writing checks--whenever they need the money (provided the business has the available cash). Guaranteed payments represent earned income to the members, thereby qualifying them to enjoy the benefits of tax-favored fringe benefits. tewlg Twitter: (@tewlg)
Posted on: Wed, 14 May 2014 17:00:01 +0000
Trending Topics
Recently Viewed Topics
© 2015