What happens if I have more than one LLC?
If you have one LLC doing multiple different activities, the liability exposure could be increased. For example, if your LLC sells products online and also has a small shop in town, if you’re sued because of an issue that happens with an online customer, that could jeopardize your physical store location.
What makes a LLC a limited liability company?
A Limited Liability Company (LLC) is a business structure allowed by state statute. Each state may use different regulations, you should check with your state if you are interested in starting a Limited Liability Company.
What is the Form 8832 for a LLC?
An LLC that does not want to accept its default federal tax classification, or that wishes to change its classification, uses Form 8832, Entity Classification Election (PDF), to elect how it will be classified for federal tax purposes.
How is a multi member LLC taxed?
• For a Multi-Member LLC (taxed as a Partnership) that means income/losses are reported on a 1065 Partnership Return and then each LLC Member will get a K-1 for their share of income/loss. (related article: how is my LLC taxed?)
When is a disregarded entity a multi-member LLC?
The rare exception to this rule is when there is a Multi-Member LLC with 2 owners and one of the owners is a Disregarded Entity of the other owner. Bob already owns an LLC called Apples LLC, which he owns 100%. Bob then forms a new LLC with 2 Members called Oranges LLC. The 1st Member is Bob and he owns 50% of Oranges LLC.
How is oranges LLC treated as a disregarded entity?
The 1st Member is Bob and he owns 50% of Oranges LLC. The 2nd Member is Apples LLC and Apples LLC owns the other 50% of Oranges LLC. Because Apples LLC is treated as a Disregarded Entity, the IRS sees both of the owners of Oranges LLC as being the same person and therefore, Oranges LLC is treated as a Disregarded Entity instead of a Partnership.
If you have one LLC doing multiple different activities, the liability exposure could be increased. For example, if your LLC sells products online and also has a small shop in town, if you’re sued because of an issue that happens with an online customer, that could jeopardize your physical store location.
Can A S-corporation be a disregarded entity?
No, an S-Corporation is not a Disregarded Entity. An S-Corporation is a separate entity from its owner(s). This doesn’t have anything to do with pass-through taxation though. The S-Corporation’s profits still flow through to the owner(s), aka shareholder(s). Note: An LLC (multi-member or single-member)…