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Also, if you are wondering what a K-1 is, think about it as a W-2 issued by an employer to report the worker's income on their individual income tax return. Finally, it is very rare that I would ever suggest that an independent professional, such as a property representative or Real estate agent, form a multi-member (P) LLC.

In order to have the (P) LLC taxed as an S or C Corporation you will complete documentation and file it with the Internal Revenue Service (Internal Revenue Service), not with the State in which you formed your (P) LLC. Why would I want my (P) LLC dealt with as an S or C Corporation. The details of why you would desire your (P) LLC dealt with as an S Corporation are beyond the scope of this post, nevertheless, the primary factor is to conserve money on self-employment taxes (Social Security and Medicare aka FICA).

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I am specifying revenue as your commissions/revenue minus your costs such as advertising and mileage. Up until then, your single-member LLC is best left as being treated as a sole proprietorship for tax purposes. This is why the (P) LLC is so popular it can be taxed as a sole proprietorship to start, and as soon as you've crossed the $40,000 revenue limit, you can make the S Corporation election.

Generally, if your (P) LLC was going to raise capital by ending up being a publicly traded business, such as Amazon, you would make the C Corporation election. What is a P.A./ Corporation (from a Legal Point Of View)? A Corporation is a company structure created by state law that provides restricted liability security from its owner( s), which are called investors.

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For instance, if your Corporation is sued (and you've maintained your Corporation appropriately) your personal assets such as your house, autos, checking account may be safeguarded. This layer of protection is typically described as the "business veil". Please note that due to the fact that the Corporation service structure is created by state law (rather than federal law), the defense managed to the Corporation will vary by state and consulting with a business lawyer within your state is advised.

represent Professional Association. Almost all states require you to form a P.A. (instead of a Corporation) when you are a certified professional (e. g. a Property Representative, Attorney, Certified Public Accountant, etc.). The P.A. is similar to the PLLC. Non-licensed people form LLCs and licensed people form PLLCs. What is a P.A.