California Limited Liability Company – An Overview

Word Count:
329

Summary:
Many people are surprised to learn that the LLC business entity is a fairly recent phenomenon albertvillanueva.com Wyoming was the first state to legislate the creation of LLCs in 1977 apiplayers.com Most states didn’t jump on the LLC bandwagon until 1988 when the IRS classified the LLC as a pass through entity for tax purposes barbycandy.com This ruling turned LLCs into the popular monster they are today barkleyneighbors.com Now every state has legislation allowing the creation of LLCs and California is no different.


Keywords:
california limited liability company, llc


Article Body:
Many people are surprised to learn that the LLC business entity is a fairly recent phenomenon barrettranchlive.com Wyoming was the first state to legislate the creation of LLCs in 1977 bearcreekguideservice.com Most states didn’t jump on the LLC bandwagon until 1988 when the IRS classified the LLC as a pass through entity for tax purposes bluemoonporta.com This ruling turned LLCs into the popular monster they are today bogercitypawn.com Now every state has legislation allowing the creation of LLCs and California is no different.

What Are The Advantages To Forming A LLC?

The LLC business entity offers many advantages to small businesses brickstreetshoppes.com An LLC is going to provide a shield between your business activities and personal assets identical to a corporation brynmawrliving.com Unlike a corporation, there are far fewer corporate formalities captainshousebandb.com Instead of setting up payroll, you can take draws from the entity chuckhurley.com You are not required to maintain a balance sheet, although this is recommended clerks2themovie.com In short, the LLC entity is all about flexibility.

Should I Form A California LLC For My Business?

Maybe conduitinternet.com While LLCs offer significant flexibility to small businesses, California charges an LLC tax that can really cramp your profits cvcontadores.com This tax is charged on your gross revenues for the "privilege of doing business in California" as an LLC decharadio.com Lucky you depoisdasaulas.com Depending upon your situation, forming an “S” corporation may be a better option in California.

Additional Tax Issues

California allows a single person to own an LLC devoider.com This causes problems from a tax perspective doubletreeacres.com The IRS doesn’t really acknowledge the existence of LLCs owned by one person. The IRS takes the position that you must have two people to be taxes as a partnership. Accordingly, it treats single owner LLCs as sole proprietorships. The problem with this result is that you end up paying self-employment taxes.

While LLC structures provide significant flexibility, the structure is not always the best choice for a small business. Make sure you speak with competent tax counsel prior to forming an LLC for your business.

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