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Should I be a Stock Held Corporation or a LLC, Limited Liability Corporation?
Should I be a Stock Held Corporation or a LLC, Limited Liability Corporation?
LLC’s, are much more flexible. Not only do they have the added protection of charging order, but they can receive the election of taxation 4 different ways.
LLC’s can be taxed as a flow through to an individual or Corporation as a Disregarded Entity (no tax return necessary).
Disregarded Entity obtained by filing an 8832 (IRS Link)
They can be taxed as a Partnership, 1065 Form. (IRS Link)
They can also be taxed as a C-Corp 1120 Form (IRS Link)
Sub Chapter S Form 1120S (IRS Link)
A LLC may be taxed any way you decide is the best tax structure for your purposes. We advise our clients to use an LLC when ever possible.
Partnerships, 1065 Form
This is the natural default of a LLC, this is how the IRS commonly recognizes a LLC. This is a flow through to the members in an LLC and commonly considered the best vehicle for holding property.
Partnerships, 1065 Form (IRS Link)can own Property (land, cars, boats, planes, ect.) and these can be depreciated. Maintenance can be taken as a deduction. These deductions can be a flow through to you and your other members.
If you sell a Property (land, cars, boats, planes, Etc.) and make money on that property, (Capital Gains) there is a 15% cap on the taxes you pay and can be as low as 5%, depending on the amount of Capital Gains.
This is simply a flow through to another individual or entity. No tax return is required.