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What would be the combined fed+state corporate income tax rate for a Delaware LLC? Quick google says this is 21% (federal) + 8.7% (Delaware). Is my understandi
by danbtl 8y ago
What would be the combined fed+state corporate income tax rate for a Delaware LLC?
Quick google says this is 21% (federal) + 8.7% (Delaware). Is my understanding of this correct, that a Delaware LLC pays 29.7% taxes on its profits?
- Saaster 8y agoUnless you have presence in Delaware (offices or employees), you don't pay corporate income taxes there just because you formed as Delware LLC or C Corp. You pay a nominal franchise tax, and you're taxed in the other state(s) you operate in.
- jahewson 8y agoYep. An LLC* is not taxed as a corporation unless it chooses to be, by default it is taxed as a sole proprietorship (and so the owner would pay income tax). This is known as a disregarded entity” at the federal level. Also watch out for franchise taxes - if you live in California it’s $800/yr minimum. * Edit: a single-member LLC
- nodesocket 8y agoPretty sure you can only be a "disregarded entity" (schedule-c) with a single member LLC. Beyond that is get's more complicated.
- jahewson 8y agoYes, that’s right. Good point!
- jkaplowitz 8y agoYou can choose to be taxed as a corporation even in that case, but it's usually not worth the tradeoffs.
- charlesdm 8y agoHow is an LLC taxed with foreign members? Is it tax exempt in the US and does the income accrue to the partners (i.e. foreign companies and/or people)?
- jahewson 8y agoI don’t know, for a single member I think the LLC might be required to pay the income tax itself in that case. You can be sure that the federal government will want its taxes. For multiple members it will be taxed as a corporation.
- gamblor956 8y agoThe California franchise tax applies to California LLCs and to non-California LLCs that do business in California, so you don't avoid it by registering in Delaware.
- jahewson 8y agoAssuming the LLC is taxed as a corporation, that 8.7% only applies to the portion of income which actually came from customers in Delaware.