A Limited Liability Company or LLC, is a hybrid type of legal structure that provides the limited liability features of a corporation and the tax efficiencies and operational flexibility of a partnership. The profits and losses pass directly through to shareholders, thus avoiding the potential double taxation of a corporation. LLC members report profits and losses on their personal federal tax returns, just like the owners of a partnership would. The main benefit is that an LLC also protects the owner and partners from liability for the business’s debts and actions. Note that an LLC is not a tax entity itself; rather, it allows the owner to choose which tax entity is preferred. From a practical standpoint, however, there are limited situations where an LLC would choose to be taxed as a corporation.
For more information on small business taxes, contact a Nevada Corporate Headquarters representative at 1-800-508-1729.