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Yep. 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). Thi
by jahewson 9y ago
Yep. 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 9y agoPretty sure you can only be a "disregarded entity" (schedule-c) with a single member LLC. Beyond that is get's more complicated.
- jahewson 9y agoYes, that’s right. Good point!
- jkaplowitz 9y agoYou can choose to be taxed as a corporation even in that case, but it's usually not worth the tradeoffs.
- charlesdm 9y 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 9y 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 9y 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.