Most beginning business owners want the simplest business structure they can get. Chances are if you went to your attorney to ask what to form, you’d be advised to form an LLC (limited liability company).
That’s good advice. But, your choice doesn’t end there. You also need to decide how the LLC will be taxed. If you don’t make that choice, the IRS is all too happy to make it for you.
In the case of a single member LLC (one owner), the IRS will default your lLC to a Sole Proprietorship.
That means you will:
* Pay more tax
* Have a 1 in 3 chance of audit (compared to 1 in 50 or 1 in 100)
And when you find out how much extra tax you’re going to have to pay, you might wonder whether the LLC really is right for you. It is. The problem is that you didn’t get the right guidance on how to take the right tax treatment.
You didn’t outgrow the LLC. You just didn’t fully utilize it.
As time goes on, and your business grows, your taxes are going to go up as well. That’s when it’s time to look at your LLC again. Because an LLC can elect it’s tax treatment, it might be time to change that election. Or, you might instead be better off adding an additional LLC.
Have you outgrown your LLC? No, probably not. Most likely you need to look at the tax treatment for the one you have and decide whether it’s time to add another.
I can help you with that. I’ll do a free review of your past tax returns to see what we can do to help you. Give Richard a call at 888.592.4769 to get more information!