General LLC FAQs
In deciding where to form a company, consider where your company intends to conduct business. Consider the cost of forming the company in that state, the tax laws and business laws of that state.
Most small business owners tend to form an LLC in the state where their company conducts (or intends to conduct) the majority of its business, and where they live.
WPAL offers LLC formation packages for costs far lower than what attorneys charge, plus applicable state filing and official fees. We have multiple packages to choose from to meet your individual budget and needs.
If you will be doing business in more than one state, additional costs might be involved because the LLC will need to register, or "qualify" to do business in other states apart from the state where the LLC was formed. To avoid this cost, it is sometimes cheaper to set up an additional LLC in a second or third state, the original LLC owning the added ones.
Get a quote today or contact WPAL? LLCs Specialist at
1-888-494-9729 with any questions.
Most businesses need to file tax returns in the states where they conduct business. An LLC having business locations in multiple states may also need to pay annual fees and file annual reports for each state in which it operates.
An LLC combines the pass-through taxation of a partnership or sole proprietorship with the limited liability of a corporation. Limited liability means that owners are only liable to the extent of their investment in a properly structured and managed LLC. Their personal assets are protected from a judgment or other action against the LLC.
Compliance, is the process by which an LLC remains in good standing by satisfying all requirements of the law. In a properly structured and managed LLC that is compliant with all laws, owners are only liable to the extent of their investment in the company.
The "corporate veil" refers to the separate legal existence of a corporation, or an LLC, that insulates the owners of the entity/company from liability for the company's actions or obligations. Maintaining the "veil" will help to shield the company's owners from personal liability for claims or lawsuits against the company. When evaluating whether a corporate veil should be pierced, courts may also consider factors like whether LLC owners have properly maintained business records and refrained from co-mingling business and personal assets."Piercing the corporate veil," or "piercing the veil," means that this liability protection is disregarded, and the personal assets of owners are at risk in a judgment against the business. This occurs generally when the LLC was not maintained in compliance with the state’s legal requirements or it failed to make clear on contracts, invoicing etc., that a third person was doing business with an LLC, not just a business. Call us on this to explain more.
If an LLC fails to meet state requirements like filing an annual report, paying franchise taxes or maintaining a Registered Agent, the State may administratively dissolve the company. Depending upon the state, this status may go by other names like void, involuntarily dissolved or forfeited.
Pass-through taxation means that each member reports his share of profit or loss from the LLC on his individual tax returns, and the Internal Revenue Service does not tax the LLC itself. This avoids the "double taxation" of general corporations, where profit is taxed once at the corporate level and dividends are taxed again at the shareholder level.
In certain scenarios, this election may allow LLC members to save on taxes. Up to a point, corporate tax rates may be generally lower than the individual tax rates. Why Pay a Lawyer? Can give you some general tips. Call us on more specific tax needs.
There is no limit to the number of members who may own an LLC. Subchapter S corporations are limited to a total of 100 shareholders. Also, members of an LLC do not need to be U.S. citizens or residents as required in Subchapter S corporation. Additionally, all shareholders in a Subchapter S corporation must be individuals, so another entity may not own part of a Subchapter S corporation.
An LLC does not need to distribute income in proportion to ownership. The shareholders of a Subchapter S corporation must receive dividends according to the number of shares they own. LLC members may split profit and loss in any way they choose. They may do the same as to depreciation.
