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LLC CPA discusses LLC Advantages | CPA Wilmington NC

LLC CPA discusses the advantage of LLCs

Gary Bode, CPA: LLCs have plenty of advantages, but the decision should be carefully considered. For a free initial consult, please call 399-2705.

I’ll present the common decision issues I see as a LLC CPA. LLCs are State created legal entities, not an IRS designation. Your LLC has several options on how it gets taxed.

Decision Factors for a Limited Liability Company

  • Type of business; banks, insurance companies and non-profits can’t be LLCs.
  • Number of Members involved; a single owner can be a single Member LLC if desired. A single Member can also elect to have the LLC taxed as a subchapter S or C Corporation. By default, the business tax entity for a LLC with two or more Members is a Partnership. But they can also choose to be taxed as an S or C Corporation.
  • Limited liability for Members; Members want to have their personal assets protected if the company is sued. As the name implies, all Members in a LLC have their individual liability limited to what they’ve invested in the LLC, unless the attorney can “pierce the corporate veil” and then attach to member’s personal assets. Since LLCs are not required to keep Minutes of their meetings, and don’t have to adopt an Operating Agreement, piercing the corporate veil, by reasons of improper management, are harder in a LLC. However illegal acts and fraud strip away any entity’s protective cloak.
  • Taxation; the LLC’s CPA doesn’t want the owners to incur the double taxation inherent in C Corporations. So, he recommended they be taxed as an S Corporation or Partnership. Both of these incur no tax per se. Rather, the profits and losses flow to each Member’s individual Form 1040.
  • Attracting investors; the LLC’s CPA knows they will require additional capital. Partnership LLCs offer more flexibility in attracting investors, because the distribution of profit or losses doesn’t have to be proportionate.
  • Management; both owners want to participate in management, which is automatically allowed in LLCs.

“The type of business structure impacts multiple facets of the company, and should be carefully decided using both current conditions and future plans.”
-Gary Bode, LLC CPA and tax accountant

Traditionally lawyers have set up LLCs, but the NC Secretary of State makes this easy to do. North Carolina law requires that a LLC name contain the words “limited liability company” or the abbreviation “L.L.C.” or “LLC,” or the combination “ltd. liability co.,” “limited liability co.,” or “ltd. liability company.”

We’re a LLC CPA firm in Wilmington NC, but serve a wide geographical base through out virtual office. For a free initial consult with a LLC CPA, please call (910) 399-2705.

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