A limited liability company (LLC) is the US-specific form of a private limited company. It is a business structure that can combine the pass-through taxation of a partnership or sole proprietorship with the limited liability of a corporation.

What is LLC corporate tax treatment?

An LLC is typically treated as a pass-through entity for federal income tax purposes. This means that the LLC itself doesn’t pay taxes on business income. The members of the LLC pay taxes on their share of the LLC’s profits. State or local governments might levy additional LLC taxes.

Can you have an LLC under AC Corp?

It’s possible for a C corp to have ownership of an LLC, but it can be complicated. There are a variety of reasons for a C corp to own an LLC. It’s important to have different accounting books for each corporation. Extra liability will be created if the purpose is solely to move money around.

Can a LLC be treated as a corporation?

Generally, LLCs are not automatically included in this list, and are therefore not required to be treated as corporations. LLCs can file Form 8832, Entity Classification Election to elect their business entity classification. Pursuant to the entity classification rules, a domestic entity that has more than one member will default to a partnership.

How is a LLC taxed as a C Corp?

Unlike an LLC taxed as a partnership, an LLC taxed as a C corporation pays income tax directly; the entity itself is the taxpayer, and the corporate tax rates apply instead of the individual rates. If an LLC has elected C corp. tax treatment, the members pay taxes only on the LLC income they receive in the form of salary and dividends.

Can a multi member LLC be taxed as a corporation?

If you have a Multi-Member LLC (2 or more owners), then the IRS will tax it as a Partnership instead. Alternatively, you can tell the IRS to tax you as a Corporation by filing an additional form after getting an EIN for your LLC. There are two different ways you can have your LLC taxed as a Corporation: