How Limited Liability Companies (LLCs) Are Taxed

written by helpingbiz
07-28-2009
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A Limited Liability Company (LLC) is not a separate tax entity like a corporation; instead, it is what the IRS calls a “pass-through entity,� like a partnership or sole proprietorship. All of the profits and losses of the LLC “pass through� the business to the LLC owners (called members), who report this information on their personal tax returns. The LLC itself does not pay federal income taxes, but some states do charge the LLC itself a tax.

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