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  • Will You Add? - Be Aware of Single Owner LLC Tax Problems

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    One of the more popular business entity choices these days is the limited liability company. If you intend to be the only owner, you need to understand something about a tax issue.

    The limited liability company has really revolutionized the world of business. The amazing little company gives you the protection from liability of a corporation without all the formalities. From a tax perspective, it can even be taxed like a partnership with one big exception. To understand the exception, we need to step back in time.

    To the surprise of many, the limited liability company is a relatively new form of business. It was created out of the blue by Wyoming in 1979. While the politicians indicated they were trying to be business friendly, they were really trying to find a way to generate more tax revenues. What better way than to create a new, flexible entity that was perfect

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    The limited liability company has really revolutionized the world of business. The amazing little company gives you the protection from liability of a corporation without all the formalities. From a tax perspective, it can even be taxed like a partnership with one big exception. To understand the exception, we need to step back in time.

    To the surprise of many, the limited liability company is a relatively new form of business. It was created out of the blue by Wyoming in 1979. While the politicians indicated they were trying to be business friendly, they were really trying to find a way to generate more tax revenues. What better way than to create a new, flexible entity that was perfec

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    ut all the formalities. From a tax perspective, it can even be taxed like a partnership with one big exception. To understand the exception, we need to step back in time.

    To the surprise of many, the limited liability company is a relatively new form of business. It was created out of the blue by Wyoming in 1979. While the politicians indicated they were trying to be business friendly, they were really trying to find a way to generate more tax revenues. What better way than to create a new, flexible entity that was perfec

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    o the surprise of many, the limited liability company is a relatively new form of business. It was created out of the blue by Wyoming in 1979. While the politicians indicated they were trying to be business friendly, they were really trying to find a way to generate more tax revenues. What better way than to create a new, flexible entity that was perfec
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    y were trying to be business friendly, they were really trying to find a way to generate more tax revenues. What better way than to create a new, flexible entity that was perfect for small businesses? Well, there is little disputing they stumbled onto something, but there was one hitch.

    From 1979 to the late 80s, the LLC more or less went unnoticed. Why? The IRS took a long time in figuring out how it would be taxed. Would it be taxed like a corporation or like a partnership? Should an entire new section of tax code be created for it? The IRS never really came up with a good answer, so they let people select if they wanted to be taxed as a corp or partnership. Most picked partnership and everything was fine.

    States are jealous of each other. When the IRS finally figured out how it would tax the limited liability company, all the other states immediately started pas

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