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Tax Deduction Consulting: LLC Tax Deductions Fargo ND

LLC tax deductions can be very confusing and the advice of a tax professional is strongly urged. The problems stem from the fact that an LLC can be treated several different ways for tax purposes. The idea behind a Limited Liability Corporation is to limit personal liability. When a business is organized as a sole proprietorship or partnership, the owners have a personal liability to the debts of the business.

H & R Block
(701) 235-5215
1100 19th Ave N
Fargo, ND
 
Taxman
(701) 282-3300
4520 19th Ave S Ste 5
Fargo, ND
 
Hmb Tax & Consulting Inc
(701) 298-3003
1131 Westrac Dr S Ste 204
Fargo, ND
 
Sandy's Tax Service
(701) 232-6701
1321 23rd St S Ste M
Fargo, ND
 
Liberty Income Tax
(701) 298-6101
2627 University Dr S
Fargo, ND
 
H & R Block
(701) 241-7628
1621 University Dr S
Fargo, ND
 
Padgett Business Services
(701) 364-9650
1450 25 St 25 St Market S
Fargo, ND
 
H & R Block
(701) 282-4570
5050 13th Ave S
Fargo, ND
 
H & R Block
(701) 241-7628
1621 University Dr S
Fargo, ND
 
H & R Block
(701) 281-4925
4731 13th Ave S
Fargo, ND
 

Tax Deduction Consulting: LLC Tax Deductions

LLC Tax Deductions

LLC tax deductions can be very confusing and the advice of a tax professional is strongly urged. The problems stem from the fact that an LLC can be treated several different ways for tax purposes.

The idea behind a Limited Liability Corporation is to limit personal liability. When a business is organized as a sole proprietorship or partnership, the owners have a personal liability to the debts of the business. In an LLC structure, the liability is limited to the investment in and assets of the business. However, for tax purposes, a LLC creates some complex situations and to maximize the LLC tax deductions, it is necessary to have the company become an "S" Corporation.

When an LLC is a single member entity, it is treated like a sole proprietorship for tax purposes. This means that all income of the business is treated as earned income to the owner and is subject to FICA and Medicare taxes. The social security tax rate of 15.3% would apply on all earnings up to $90,000 and 2.9% would apply on all income over $90,000. When the LLC is a multiple member entity, it is treated as a partnership and again all income is considered as earned income.

In order to avoid this, an LLC must file a Form 2553 and apply for an EIN (employee identification number) and fill out a Form SS-4. This allows the LLC to be taxed as an "S" Corporation. This makes all income passive income and it is passed on to the owners as such. It is necessary that the LLC file an 1120S Corporate Tax Return. This election must be made within 75 days of the formation of the LLC or beginning of the tax year. Only United States citizens can make this election.

Another option is to file Form 8832 and apply for an EIN and structure the LLC as a "C" Corporation. In this case the income is passed on to the stock holders, and the LLC is able to take advantage of the low 15% on the first $50,000 tax rate. The Corporation then must file a regular Form 1120 Corporate Tax Form. This opti...

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