Search Site

LLC tax pros and cons

LLC tax pros and cons

On behalf of business attorney, H. Clay Parker, Esq. posted in Business Formation & Planning on Monday, June 12, 2017.

Florida entrepreneurs who are considering establishing new companies and may be interested in utilizing the Limited Liability Company structure should understand how taxes are handled for these types of businesses. There may be both pros and cons associated with the taxation model of an LLC and several things may impact these for a given business.

The Balance explains that there is no single tax category or method for LLCs as the taxation for these companies depends in part upon how many members a business has. Some LLCs may have only one owner while others may have multiple owners. In a Limited Liability Company, an owner is called a member. An LLC with one member may be taxed like a sole proprietorship while an LLC with multiple members may be taxed like a partnership.

According to the Florida Department of Revenue, single-member LLCs do not file business taxes and all taxation is focused on the individual members. Multiple-member LLCs with a member that is a corporation may be required to file a Florida Partnership Information Return. Some LLCs can be classified as their own corporations. In these situations, the LLC business would file its own state tax return.

For those LLCs that are not required to pay company taxes, the ability to avoid what can be seen as double taxation may be an advantage. In addition, the tax rate of an individual member may be lower than the rate at which the business would have been taxed so a larger savings may be realized in this way. However, there may still be the requirement for members to pay self-employment taxes on top of income taxes.

Contact us

Please fill out the form below and one of our attorneys will contact you.

Quick Contact Form

  • This field is for validation purposes and should be left unchanged.
Our Office
  • Orlando Office
    501 N. Magnolia Ave
    Orlando, Florida 32801
    Phone: 407-894-8440
    Fax: 407-894-0400
An Attorney’s Job
"My job is to maximize the economic outcome in a legal setting, while advancing your legal rights and cause." Attorney H. Clay Parker IV