Why Do Their Members Deserve Liability?
1. Why do their members deserve limited liability? Is it fair that LLCs do not pay income taxes?
A small business deserve limited liability because it’s used like a risk protection for their business as well as the owners. “It allows owners, called members, to have limited liability just like corporations’ (Lau, 2012, p. 367). There are so many new incorporated business laws that a business have to face on a daily basic. LLCs helps small businesses with the amount of liability that they face by decreasing their chances of creditors taken advantages of their debt issues. It allows small business: to avoid double taxation, ability to choose the LLC location, make changes easily, protects their assets, and can register easily without an attorney (Boitnott, 2015). The textbook states, “The operating agreement allows members to run their LLCs any way they wish to, but it can also be a trap for the unwary” (Lau, 2012, p. 367) …show more content…
“Unlike corporations, however, LLCs can avoid double taxation by choosing to be taxed like a partnership or sole proprietorship” (Lau, 2012, p. 367). As far as income taxes, their owners don’t bring in the amount of revenue as larger corporations do and this will allow them not to be double tax so they are allowed to report their profits or losses on their personal income tax returns. “A LLC is not a separate tax entity like a corporation; instead, it is what the IRS call a “pass-through entity,” like a partnership or sole proprietorship. All the profits and losses of LLC “pass through” the business to the LLC owners (called member), who report this information on their personal tax returns” (Fitzpatrick,
A small business deserve limited liability because it’s used like a risk protection for their business as well as the owners. “It allows owners, called members, to have limited liability just like corporations’ (Lau, 2012, p. 367). There are so many new incorporated business laws that a business have to face on a daily basic. LLCs helps small businesses with the amount of liability that they face by decreasing their chances of creditors taken advantages of their debt issues. It allows small business: to avoid double taxation, ability to choose the LLC location, make changes easily, protects their assets, and can register easily without an attorney (Boitnott, 2015). The textbook states, “The operating agreement allows members to run their LLCs any way they wish to, but it can also be a trap for the unwary” (Lau, 2012, p. 367) …show more content…
“Unlike corporations, however, LLCs can avoid double taxation by choosing to be taxed like a partnership or sole proprietorship” (Lau, 2012, p. 367). As far as income taxes, their owners don’t bring in the amount of revenue as larger corporations do and this will allow them not to be double tax so they are allowed to report their profits or losses on their personal income tax returns. “A LLC is not a separate tax entity like a corporation; instead, it is what the IRS call a “pass-through entity,” like a partnership or sole proprietorship. All the profits and losses of LLC “pass through” the business to the LLC owners (called member), who report this information on their personal tax returns” (Fitzpatrick,