Episode 76: How LLCs and Taxes Work Together

Business owners listen up… Taxes aren’t that scary!

No seriously, once you have your ducks in a row it’s really not that bad!One thing I recommend is that all solo business owners get and ensure they have registered for an LLC in their home state! So how does LLCs work with your personal tax return each year? I am going to cover that, and how this passthrough taxation entity is going to benefit you in the long run!

Episode Highlights

• The basics like what is a Limited Liability Corporation or also referred to as an LLC. 

• Why I call an LLC the best insurance for your business if you don't have insurance. 

• How LLCs and taxes work together.

• How it impacts your taxes and your personal tax return every year.

"The good thing here is your LLC isn't going to get double tax. So the LLC itself won't get taxed. You're just going to get taxed one time at the personal level. For LLCs though, just remember that you want to take all of your deductions. The Legal Paige has podcasts all about the tax deductions that you need to ensure your business is taking. So please go check out those episodes if you want more information on that."

"Now limited liability means of course it has liability protection. The bubble surrounding your LLC remains intact if you're not commingling funds. So there's this little protection around your business that for any risks or liabilities that could occur for disgruntled clients for any disputes, any lawsuits that could come up, if you have any negligence suits that are filed against your company, that all of the assets or the business are the only ones at risk."

"With an LLC, all of the profits and losses of the LLC, pass through the business to the LLC owners called members and those members then report this information on their personal tax returns. So the one thing to note here is LLCs are great because unlike a C corporation LLCs do not pay federal income taxes."

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