Consider tax implcations before forming a LLC

Business owners based in Maryland owe it to themselves to study the tax implications that come with forming a LLC. LLC’s are a popular form of business organization because the offer an opportunity to organize a business that is separate from personal expenses and liability.

For partners looking to start a small business and protect their family assets, this is an attractive option. Many times, when forming their business, individuals tend to put the potential taxation repercussions. When filing federal taxes, the IRS has no designated form for LLCs. Owners can file as if the business were an S or C corporation.

The state of Maryland does not require a special business tax for LLCs. While the State Comptroller’s office provides information for filing business taxes, in many case those new to paying business taxes are prudent to seek the advice of an attorney.

Regardless of whether a company decides to file as an LLC, all employee benefits are tax deductible. A company filed as an LLC may not be able to deduct benefits paid to owners or shareholders of the LLC. Filing for an LLC or any other type of business entity does not affect the potential success of a new business.

When looking for the tax benefits or liabilities associated with forming an LLC, many people try to cut their expenses by looking online for help and information. Going by information available on many websites can be misleading and can easily lead a new business in trouble with the IRS when tax time rolls around. While the IRS and the state of Maryland do strive to provide information for the layman, the process of filing a business can be confusing and intimidating. In order to ensure that the correct business taxes have been paid, many owners turn to an attorney experienced in business law.

Source: FOX Business, “The Tax Implications for Forming a LLC“, Bonnie Lee, June 13, 2014

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