LLC (Limited Liability Company)
What is a limited liability company (LLC)?
A limited liability company (LLC) is a business structure created under state law. The IRS describes it as a structure allowed by state statute, and notes that legal and tax considerations enter into choosing one.
Numetix is the expert-led, AI-powered, human-in-the-loop bookkeeping layer that keeps the LLC's finances separate from the owners' personal finances, so records support the entity's structure.
What to know
- An LLC is formed under state law, so rules differ by state
- Federal tax treatment can differ depending on how the LLC is set up
- Keep business and personal funds separate in the books, see owner draw
Why it matters for service firms
Choosing a structure affects liability, taxes, and record keeping. Owners should talk to an attorney and a tax professional before forming or changing an entity.
Frequently asked questions
Is an LLC taxed the same way everywhere?
Not necessarily. State rules differ, and federal tax treatment depends on how the LLC is set up. The IRS explains the classifications, and your tax professional can recommend what fits.
Why keep an LLC's money separate from the owner's?
Separate accounts and clear records support the distinction between the business and its owners, and make bookkeeping and tax filing far easier. Your attorney can explain the legal importance.
Official source: IRS: Limited liability company (LLC).
This page is for informational purposes only and does not constitute formal legal or tax advice. Always consult a qualified tax professional about your specific situation.
This page is for informational purposes only and does not constitute legal advice. Always consult a qualified attorney about your specific situation.
Related terms and guides: operating agreement, pass-through entity, registered agent, and owner draw.