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Size up an LLC for your business

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in Small Business Tax,Small Business Tax Deduction Strategies

The limited liability company (LLC) may seem like the new kid on the block, but it’s actually been around for almost 30 years. Wyoming enacted the first LLC legislation in 1977. But LLCs didn’t start to catch on nationwide until Uncle Sam approved favorable tax treatment in 1988. Now, all 50 states and the District of Columbia have LLC laws on the books.  

What makes LLCs tick

LLCs continue to grow in popularity, especially among sole proprietors and small business owners. And no wonder: They combine the tax benefits of a passthrough entity with the legal protection afforded to old-fashioned corporations.

Here’s the drill: LLC owners (called “members” in tax lingo) generally report the income or losses from the business on their personal tax returns. As with an S corporation or partnership, items of income and loss are passed through to the LLC members.

Most important, the LLC isn’t a taxpaying entity itself (even though it ...(register to read more)

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