Is Your LLC Giving Your Money to the IRS (Part 3)

In Parts 1 & 2 of this blog series “Is Your LLC Giving Your Money to the IRS?,” you learned the unique business structure of the LLC and how it can be taxed four different ways under IRS rules. 

By now, you understand the importance of setting up your LLC appropriately. You likely have also recognized the need and the value of professional direction. 

When seeking out a professional advisor, make sure to choose someone who will analyze the entire picture of all factors that could impact your business setting up an LLC pertains to your individual situation.

While it makes sense to seek appropriate legal advice, you should realize that it is not the entire solution.

Why? Unfortunately, even when seeking an attorney, many simply suggest as a first-time business owner, you need to “set-up an LLC”. Often the attorney focuses on the legal side of things when there is so much more to consider. 

That being said, a CPA will view things only from the tax perspective.

It is highly advised that you find someone who understands your industry and who knows the kind of legal structure your company needs in order to thrive. 

Most importantly, you must invest a bit of time educating yourself on how these structures work. Investing your time to learn about LLCs can save you thousands of dollars and keep your business from being overtaxed!

The first thing to ask yourself is if it is really the right time in your business life to take on the cost and legal responsibilities that go with forming an entity.  It may very well be the right time if you need:

1. Deduct employee benefits
2. Gain easier access to capital funding
3.  Transfer ownership easily
4. Centralize management
5. Have anonymity

Before your decision making, it is also vital to consider all three of these aspects of your situation:

1.   Asset protection
2.  What adding this particular entity to your portfolio does for other aspects of your financial situation
3.   How your tax situation will possibly be affected

Every business structure has its strengths and weaknesses. You want to maximize the pros and minimize the cons of each entity before you add it to your portfolio.  It’s up to you and your business development team to find out which ones will benefit your company best.

We hope you have enjoyed this LLC 3-Part Blog series and found it of value. 

For assistance with your business strategy and the other crucial elements vital to your business success, contact Business Untangled today!