LLC stands for Limited Liability company. While you may be aware that an LLC is a private company, you may not be aware of the series of tax benefits offered to LLCs? To ensure that you don’t miss out on any of the support that the IRS is offering LLCs at the moment, our team decided to create this blog post on the benefits.
Double taxation
A major benefit that LLCs have in terms of tax benefits is that they can help you to avoid double taxation. This is because ordinarily a corporation and its shareholders are both required to pay tax on their income – hence the double tax. Some corporations can even be tripled taxed if they’re further required to pay corporate taxes. However, by founding an LLC, you can avoid these taxations legitimately.
Capital expenditure deductions
Another benefit of starting an LLC is that you can experience deductions on your capital expenditure. This is because LLCs are able to deduct the cost associated with purchasing equipment and goods. The deduction is calculated in reference to what a business may need to use over the course of the year according to the IRS provisions.
Flexibility
LLCs are also favorable due to their tax flexibility. This is mainly because the IRS allows this type of business owner to choose the way in which they want their business to be taxed – and yes you have to be taxed – from a range of options. For example, you could decide that you want your business to be taxed as a C corporation, S corporation, as a sole proprietor, or as a partnership. However, before you make this decision it’s worth having a conversation with your ABBO accountant so that they can guide you through the advantages of each In the run-up to your appointment, have a look at IRS Form 8832 so that you become more familiar with the process.
For more information on LLC tax benefits, feel free to contact a member of our team at ABBO Tax today.
