How Limited Liability Companies (LLCs) Are Taxed
Limited Liability Companies, better known as LLCs, are the simplest and least expensive business structures in the United States. This legal structure combines the tax advantages of a company with the protection of personal responsibilities enjoyed by corporations. Unlike a sole proprietorship, an LLC is a completely separate entity from its owner or owners. In this way, business owners are protected from personal liability. However, according to James Liggett CPA , who has years of experience in assisting taxpayers and small businesses with taxes in the state of New York, when it comes to filing taxes, an LLC works much like a sole proprietorship. Here, James Liggett CPA answers the most frequently asked questions about how LLCs are taxed. What taxes must an LLC pay? For tax purposes, the IRS treats a member's LLCs as sole proprietorships. Liggett CPA explains that this means that the LLC itself does not pay taxes and you do not have to file a return with the IRS. If you are the s...