company info?

[st. john]

anyone tell me pls what are the advantages and pitfalls of having ur business as Llc ???

thx.

[Penny Lane]

advantages-mostly liability--no personal liability and it has pass-thru taxation

not sure of disadvantages--some of the laws vary from state to state over here

[Angry Ewok]

An LLC says your personal assets aren't the same as the company's. That's a big deal if ever the company is subject to seizure. Taxation is different, too, but I couldn't expand on specifics.

[Penny Lane]

i think you can choose how you want to be taxed

[Vadie Stark]

i think you can choose how you want to be taxed

;D

[Angry Ewok]

I think that depends on how many friends you have in Washington.

[Vadie Stark]

 Me? None. Just wish we could choose.
Who do I talk to? ;D

[ycartrob]

Wikipedia is on most internet systems. LLC tidbits

Income taxation
For U.S. Federal income tax purposes, LLCs that are treated as partnerships use IRS Form 1065. LLCs are organized with a document called the "articles of organization," or "the rules of organization" specified publicly by the state; additionally, it is common to have an "operating agreement" privately specified by the members. The operating agreement is a contract among the members of an LLC and the LLC governing the membership, management, operation and distribution of income of the company.

Under some circumstances, however, the members (the LLC version of shareholders or partners) may elect for the LLC to be taxed like a corporation (taxation of the entity's income prior to any dividends or distributions to the members and then taxation of the dividends or distributions once received as income by the members).

Operating as an LLC form of partnership does not mean that appropriate US federal partnership tax forms are not necessary, or not complex. As a partnership, the entity's income and deductions attributed to each member are reported on that owner's tax return.

With federal income tax treatment as a partnership, LLCs can lose the tax advantage. The possible label "disregarded entity" for income tax purposes singles out the one-member owner of an LLC as actually earning income and deductions directly. It is the owner, then, who reports as a business proprietor, rather than as an LLC operating an active trade or business. An LLC passively investing in real estate and owned by a single member would have its income and deductions reported directly on the owner's individual tax return on a Schedule E tax form. And an LLC owned by a corporation--in other words, an LLC with a single corporate member--would be treated as an incorporated branch and have its income and deductions reported on the corporate tax return, creating double taxation.


Advantages
-Check-the-box taxation. An LLC can elect to be taxed as a sole proprietor, partnership, S corporation or C corporation, providing much flexibility.
-Limited liability, meaning that the owners of the LLC, called "members," are protected from some liability for acts and debts of the LLC, but are still responsible for any debts beyond the fiscal capacity of the entity.
-Much less administrative paperwork and record keeping than a corporation.
-Pass-through taxation (i.e., no double taxation), unless the LLC elects to be taxed as a C corporation.
-Using default tax classification, profits are taxed personally at the member level, not at the LLC level.
-LLCs in most states are treated as entities separate from their members, whereas in other jurisdictions case law has developed deciding LLCs are not considered to have separate legal standing from their members (see recent D.C. decisions).
-LLCs in some states can be set up with just one natural person involved.
-Membership interests of LLCs can be assigned, and the economic benefits of those interests can be separated and assigned, providing the assignee with the economic benefits of distributions of profits/losses (like a partnership), without transferring the title to the membership interest (see, for example, the Virginia and Delaware LLC Acts).
-Unless the LLC has chosen to be taxed as a corporation, income of the LLC generally retains its character, for instance as capital gains or as foreign sourced income, in the hands of the members

Disadvantages
-Although there is no statutory requirement for an operating agreement in most states, members who operate without one may run into problems.
-It may be more difficult to raise financial capital for an LLC as investors may be more comfortable investing funds in the better-understood corporate form with a view toward an eventual IPO. One possible solution may be to form a new corporation and merge into it, dissolving the LLC and converting into a corporation.
-Many states, including Alabama, California, Kentucky, New York, Pennsylvania, Tennessee, and Texas, levy a franchise tax or capital values tax on LLCs. (Beginning in 2007, Texas has replaced its franchise tax with a "margin tax".) In essence, this franchise or business privilege tax is the "fee" the LLC pays the state for the benefit of limited liability. The franchise tax can be an amount based on revenue, an amount based on profits, or an amount based on the number of owners or the amount of capital employed in the state, or some combination of those factors, or simply a flat fee, as in Delaware. Effective in Texas for 2007 the franchise tax is replaced with the Texas Business Margin Tax. This is paid as: tax payable = revenues minus some expenses with an apportionment factor. In most states, however, the fee is nominal and only a handful charge a tax comparable to the tax imposed on corporations.
-Some creditors will require members of up-and-starting LLCs to personally guarantee the LLC's loans, thus making the members personally liable for the debt of the LLC.
-The management structure of an LLC may be unfamiliar to many. Unlike corporations, they are not required to have a board of directors or officers.
-Taxing jurisdictions outside the US are likely to treat a US LLC as a corporation, regardless of its treatment for US tax purposes, for example if a US LLC does business outside the US or a resident of a foreign jurisdiction is a member of a US LLC.
-The LLC form of organization is relatively new, and as such, some states do not fully treat LLCs in the same manner as corporations for liability purposes, instead treating them more as a disregarded entity, meaning an individual operating a business as an LLC may in such a case be treated as operating it as a sole proprietorship, or a group operating as an LLC may be treated as a general partnership, which defeats the purpose of establishing an LLC in the first place, to have limited liability (a sole proprietor has unlimited liability for the business; in the case of a partnership, the partners have joint and several liability, meaning any and all of the partners can be held liable for the business' debts no matter how small their investment or percentage of ownership is).
-The principals of LLCs use many different titles -- e.g., member, manager, managing member, managing director, chief executive officer, president, and partner. As such, it can be difficult to determine who actually has the authority to enter into a contract on the LLC's behalf.

Variations
A Professional Limited Liability Company (PLLC or P.L.L.C.) is a limited liability company organized for the purpose of providing professional services. Usually, professions where the state requires a license to provide services, such as a doctor, chiropractor, lawyer, accountant, architect, or engineer, require the formation of a PLLC. Exact requirements of PLLCs vary from state to state. Typically, a PLLC's members must all be professionals practicing the same profession. In addition, the limitation of personal liability of members does not extend to professional malpractice claims.
-A Series LLC is a special form of a Limited liability company that allows a single LLC to segregate its assets into separate series. For example, a series LLC that purchases separate pieces of real estate may put each in a separate series so if the lender forecloses on one piece of property, the others are not affected.

[Penny Lane]

i meant some are taxed like partnerships, some like corps--i thought you could elect it on your filing

[Vadie Stark]

I'm on it. Sorey to interrupt. Carry on

[Angry Ewok]

I hereby vote to eject edtombell from all future discussions pertaining to the advantages and pitfalls of having an LLC.

[Angry Ewok]

I hereby withdraw the previous post from the record and do not recall ever having written it.

[tomEisenbraun]

wait. but I love edtombell...

[Vadie Stark]

 :-*....back at ya boys  ;)

[Angry Ewok]

Me, Tom, and edtombell, are tight... we're practically business partners.

(Damn, see how I just swerve back on topic with such grace?!)

[Vadie Stark]

AE we need in on Tom's real estate venture ;) that is where the real money is!