Unfortunately, there are many companies “selling” LLC’s that don’t teach their clients how to use them. Like any tool, an LLC can be very productive, but also destructive if misunderstood. If you own an LLC and don’t know how to use it, relax…MainStreet will get you on track, training you to decrease your taxes and increase your liability protection.
What are the benefits of an LLC?
- Tax flexibility; LLC’s can elect to be taxed as C-Corps, partnerships or S-Corps.
- Less regulations; LLC’s are not required to keep formal meetings w/minutes, corporate resolutions, etc.
- Great liability protection; LLC’s protection is not contingent upon compliance with meetings/documents
- LLC’s can be used as holding companies for other businesses to protect assets
What is an S-elected LLC?
When an LLC elects for tax status as an S-Corp, it eliminates a 15.3% “self-employment tax” on its net income. In all tax respects, the LLC is treated as an S-Corp and for all legal issues, the LLC is treated as an LLC and does not require compliance with corporate regulations for protection of personal assets. An S-elected LLC is required to pay payroll taxes on a “fair & reasonable” officer salary in place of the self-employment tax on net income.
Can you S-elect your existing LLC?
Yes and no. According to current IRS law, LLC’s can s-elect during the first 75 days after organizing or during the first 75 days of each sublimental year. If you have an existing LLC that is older than 75 days, you have the option to s-elect from January 1st-March 15th each year, or create a new LLC now and s-elect it. The choice to wait or create a new LLC will be based on the month of the year you come in contact with MainStreet. If by creating a new s-elected company today you can save thousands by next year (or at least the $394 to set up and file the entity), it is impractical to wait.
How do I organize multiple LLC’s to protect my business assets?
Organizing a single s-elected LLC that owns all of your business assets and leases them to operating companies protects your business assets from being lost in litigation proceedings. See Multiple LLC Management page for more information.