What are the benefits of forming a limited liability company?
To be honest, this question is rather vague to answer directly. When most people ask this question, it usually means they have seen some advertising claims about LLC tax advantages. The “advantages” depend on how you look at them. Most companies that emphasize tax advantages as a selling point are overstating the benefits of the pass-through taxation treatment of the entity by the IRS. If you think about it for a minute, you will understand this pass-through feature is the same as with a partnership, a sole proprietorship (where there is no separate legal entity at all) or a Subchapter S Corporation. Another term for the pass-through tax feature is “disregarded entity”. What this means, is for tax purposes, the LLC is disregarded. It doesn’t exist as far as the IRS is concerned. The owners are individually responsible for income taxes on the profits and losses of the business. This is the same with an individual operating as a sole proprietor, or a partner to a partnership, or sharehol
