Washington Business Entity Search (LLC, Corporation, Partnership)

Looking for information on how to check for business name availability in Washington?

Or maybe, you’re looking to gather some information about a competing business?

Independent of what the reason is, all you need to do is a simple business entity search on Washington secretary of state website.

On this page, we’ve shared step by step instructions on how to carry out the search. Additionally, we’ve also tips to verify if the business name is legally valid or not and does it infringe any trademarks.

Before that, here are a few points you must know:

• Records of all the business entities (LLC, Corporation, Partnerships) are maintained by Corporations And Charities Filing System. CCFS is a subdivision of the Secretary of State.
• Business entity information is a matter of public records and is freely available on the SOS website.
• While researching a name for your business, make sure there is no trademark registered for the same name.
• Business owners need to create an account with CCFS to file annual reports or to file any amendments.

Washington Business Entity Search

You can conduct the search either by business name or Unified Business Identifier (UBI) number.

Additionally, there is an ‘Advanced Option’ which is best suited for conducting research on competitors.

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Search By Name or UBI Number

Step 1: Open Washington Corporation & Charity Division page – Link.

Step 2: Next, scroll down to ‘Corporation Search’ section.

Step 3: Based on the information available, enter either the business name or UBI number (9 digits).

If you’re searching by name, choose the appropriate filter –  Contains, Began With and Exact Match.

Step 4: Click on the ‘Search’ button.

Step 5: On the next page, you’ll be able to view the list of business entities matching the searched string.
Note: Search by UBI number, will show one valid result.

Step 6: Click on the desired business entity name to view detailed information about the business.

Following information pertaining to each business entity is available: Business Name, UBI#, Business Type, Principal Office, Address, Registered Agent Name, and Status.

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How to check for Business Name Availability

Checking availability of a business name is a straightforward process. It involves a couple of steps and some amount of permutation and combination. The trick here is to find a unique name which is distinguishable enough compared to any existing business name.

Just follow this process:

Iteration #1: Exact match search

Example let’s say the name you selected is ‘Epic Web Media LLC‘.

Step 1: On the search page, enter the full name without the business endings like LLC or corporation. In this case, it will be ‘Epic Web Media’.
Step 2: Choose the filter as ‘Exact Match’ and click on ‘Search’ button.
Step 3: On the next page, if you see the message ‘No Values Found’,  proceed to the next iteration. If you see a similar name, you would need to come with a different name.

Iteration #2: Partial Match search

Next repeat the search process, with just the combination of the prominent word in the name. Use ‘Contains’ search filter.

In this case, we will try searching the or following terms:

• Epic Media
• Epic Webmedia
• Web Media
• Webmedia

The aim of this process to find out if there are any closely similar names or not.

Luckily in this, case the name ‘Epic Web Media LLC‘ is available and it can be registered in Washington.

Final Step: Verify if there is any trademark infringement

On the search page, scroll to the trademark section. Enter the selected name and follow the same process (Iteration #1 & #2) shared above.

If you see ‘No results Found’ in each of the cases, the name is legally valid and you can go ahead.

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 Contact Information

If still have any query, you can contact the Secretary of State offie using any of the channels shared below.

Address	Physical Address: Washington Secretary of State, Corporations Division, 801 Capitol Way South PO Box 40234, Olympia, WA 98504-0234Mailing Address: PO Box 40234 OLYMPIA WA 98504-0234
Contact Number	General: (360) 725-0377
Social Media	Twitter / FB
Email	corps@sos.wa.gov
Office Hours	8 AM – 5 PM (Mon to Fri) Sat/Sun – Closed National Holidays – Closes

Links & References

1. https://www.sos.wa.gov/
2. https://en.wikipedia.org/wiki/Secretary_of_State_of_Washington

Last Updated: 17/01/2019

The post Washington Business Entity Search (LLC, Corporation, Partnership) appeared first on .

source https://businessentity.org/wa/washington-business-entity-corporation-search/

Can an S Corp Own an LLC Or Vice Versa?

YES, it’s possible for an S Corp to own an LLC. But should you? Read on to find scenarios when this business structure best works.

Most of the entrepreneurs after their initial research prefer LLC or Limited Liability Company. The personal asset protection, pass-through income, and reduced paperwork are some of the most common reasons why most entrepreneurs prefer the LLC structure.

But look carefully, and you will see that almost similar benefits are also available with the S Corp structure.

After understanding both the business structures, a lot of entrepreneurs wonder whether it is possible for an S Corp to own an LLC? Or, can an LLC own an S Corp?

If you want to know the same, you have reached the right place. In this post, we will try to understand both of these business structures and see whether they can own one another.

S Corp vs. LLC

While both, S Corp and LLC, are known to offer almost similar benefits, there are some considerable differences between the two.

For instance, LLC is a state-level business entity which files state taxes. On the other hand, an S Corp is similar to a standard Corporation or C Corp, and it files federal taxes. This also means that S Corps get to enjoy many Corporate structure benefits such as stock offering, perpetual existence, and some tax-free benefits.

LLCs do not get these benefits. LLCs have a defined lifespan, and in some of the states, an LLC can only exist for up to 30 years. But registering an S Corp is more complex and expensive than forming an LLC.

Also, there is no restriction on the total number of members or owners an LLC can have. Even the citizenship of the LLC members is not restricted. This makes it easier for LLCs to attract foreign investors.

So, Can an S Corp Own an LLC?

Yes, it is possible for an S Corp to own an LLC. While the ownership requirements vary between states, in most cases, an S Corp can own an LLC by becoming its member or owner.

Now, an important question here is what about the taxation of an LLC which is owned by an S Corp?

LLCs are pass-through tax entities. The business income passes through the owners who then file the taxes along with their personal income tax. If an S Corp has a single owner and the LLC it owns has not elected Corporate taxation, the LLC’s taxation will be similar to that of a disregarded entity. The LLC income in such cases will pass through the S Corp for taxation.

But if the S Corp has more than one owner, the LLC it owns will be a multi-member LLC. In such cases, its taxation will be similar to that of a partnership. The owners will pay taxes on the business income as per their ownership share in the business.

If the LLC elects Corporate taxation, it will have to file its own taxes separate from the owners.

Can an LLC Own an S Corp?

In most of the cases, it is not possible for an LLC to own an S Corp. This is mostly due to the strict S Corp requirements of the IRS which makes most LLC owners ineligible to own an S Corp. But in some cases, a single-member LLC can be an exception.

If it is a multi-member LLC, it will have to elect between partnership and Corporate taxation. Both of these entities cannot own any interest in an S Corp. But if an LLC is a single-member LLC which has not elected Corporate tax structure and if the single owner of the LLC is eligible for owning an S Corp, it is possible for that LLC to own an S Corp.

Why Do S Corps Own LLCs?

As the tax treatment of both of these business structures is similar, there is no tax benefit for an S Corp if it owns an LLC. But many of the S Corps still own LLCs due to the flexibility that the LLC structure offers.

For instance, in the case of an S Corp, the profits of the business are divided as per the ownership share of the owners. But with the LLC structure, the members can split the profits equally. A lot of times when an S Corp sees a new business opportunity and believe that owning a particular LLC is important to benefit from the opportunity, they consider owning the LLC.

Conclusion

Is it possible for an S Corp to own an LLC? In most cases, yes. But if you reverse the question, the answer is mostly no. A lot of things also depend on state laws. So, check with the Secretary of State’s office to know more about the laws in your state.  

If you are an S Corp and want to own an LLC, ensure that you thoroughly understand the whole process. Go through the pros and cons of owning an LLC as an S Corp and only consider it if you are sure to experience some big business benefits.

The post Can an S Corp Own an LLC Or Vice Versa? appeared first on .

source https://businessentity.org/learning-center/can-s-corp-own-llc/

What is a Professional LLC (PLLC) | How it differs from a LLC

If you are planning to start a new company, it can be challenging to select the right business structure.

This decision is crucial as it has a direct impact on a host of essential aspects of your business.

If like most people you are trying to know more about common business structures, you will mostly come across options such as LLC, partnership, and corporation.

But another not so popular business structure is PLLC. If you do qualify for this structure, your business can experience some valuable benefits.

But what is a PLLC? Who can form a PLLC? What are the benefits of this business structure?

Let us find answers to these essential questions.

What is a PLLC?

A PLLC or Professional Limited Liability Company is a type of LLC. This business structure is only available to a few licensed professionals. With this business structure, the company can only offer services related to their profession.

It is important to note that only a few states in the US let licensed professionals select between LLC and PLLC. In many other states, it is mandatory for licensed professionals only to form PLLCs. But there are some states where the PLLC structure does not exist. In such states, licensed professionals can go ahead with the standard LLC structure.

Just like an LLC, a PLLC can also have a single owner or multiple owners. The owners are known as members. In case if it a single-member PLLC, its taxation will be similar to that of a sole proprietorship. Taxation of a partnership will apply for multi-member PLLCs.

Who Can Form a PLLC?

There are many different types of licensed professionals who can form a PLLC. The state laws designate the professions that can create a PLLC.

While the laws vary between states, some common professions eligible to set up a PLLC are as follows-

• Doctors
• Lawyers
• Architects
• Dentists
• Chiropractors
• Psychologists
• Veterinarians
• Engineers
• Accountants

Benefits of Forming a PLLC

PLLCs are just a type of LLC. As a result, they offer all the benefits available with the LLC business structure. For instance, PLLC also provides limited liability protection. If someone files a lawsuit against the PLLC, the personal assets of the owner/s remain protected. But there are limitations to this protection.

They can also have employee retirement plans that have higher limits for contribution as compared to partnerships or sole proprietorships. Taxation flexibility is also an excellent advantage which makes PLLC an ideal choice for licensed professionals.

Forming a PLLC

Forming a PLLC is similar to creating an LLC. It is a 2-step process in which the PLLC first needs to file the Articles of Organization. The next step is to get the professional license and Articles of Organization reviewed by the state licensing board.

For instance, if you are a doctor and you want to form a PLLC, the medical licensing board will review your license and Articles of Organization. Also, some of the states require your business name to have “PLLC” in it.

Taxation of PLLC

Just like an LLC, a PLLC pays taxes like a sole proprietorship or a partnership depending on the number of members it has. PLLCs are also pass-through tax entities. This means that the PLLC taxes pass through the personal income tax of the owners.

In the case of multi-member PLLC, the members will pay taxes by their ownership share in the PLLC.

Difference Between PLLC and LLC

PLLC and LLC are fundamentally the same. It is just that to form a PLLC; you have to be a licensed professional. Apart from this, the formation, taxation, and functioning of LLCs and PLLCs are the same.

But it is essential to know about PLLC as in some of the states it is compulsory for some licensed professionals to only form a PLLC and not the standard LLC.

What is a PC? Is It Similar to PLLC?

No, PLLC or Professional LLC is a type of LLC and PC, or Professional Corporation is a type of corporation. While both the business structures require licensed professionals to be the owners, there are significant differences between the two.

For instance, a PLLC is a pass-through tax entity wherein the business profits are passed through the personal income tax of the owners. But with a PC, a corporate rate of tax is applicable, and taxation of the owners is as per the dividends they receive from the business.

There are other significant differences with regards to the formation, management, and functioning of PLLC and PC.

Conclusion

As you can see, LLCs and PLLCs are mostly same business structures. The difference in the name is due to the requirement of some states where some specific licensed professionals can only form a PLLC.

So, if you are a licensed professional wanting to form a legal business entity, make sure that you go through your state laws. It is possible that PLLC might be mandatory, optional, or not applicable in your state.

If you want to select between PLLC and PC, know that PC is a more complex structure. However, in a lot of cases, the PC structure can be a better choice. Consult a legal professional in this matter to make the right decision.

The post What is a Professional LLC (PLLC) | How it differs from a LLC appeared first on .

source https://businessentity.org/learning-center/what-is-a-professional-llc-pllc/

How to Change LLC Name?

If you are running an LLC for some time now, it is possible that you might want to change the name of your LLC due to many reasons.

You might just not like the existing name anymore, or it might not be in line with your current branding or business strategy.

So, is it possible to change the name of your LLC? Yes, you can change the name of your LLC anytime you want. While this is mostly a straightforward process, it can be time-consuming, especially if you have operations in multiple states.

Also, a lot of LLCs rather than legally changing the name of their LLC, prefer filing a fictitious business name or DBA.

Let us have a close look at the process of changing the name of your LLC and why do businesses prefer DBA.

Changing the Name of Your LLC

Following are the steps to change your LLC name-

Step 1- Check Availability of Business Name

The first step is to check whether the new name you have for your business is available in your state. It is very much possible that there might be another business already operating under the new name you are planning for your LLC.

You can check the secretary of state’s website to make sure that your new business name does not have any conflicts with existing businesses in your state.

Refer our 50-State guide for checking business name availability (opens in new tab).

Step 2- Fill and Submit the Amendment Form

LLCs have to file Articles of Organization with the state to form the LLC. To change LLC name, you will have to make changes to those articles. You can find the amendment form from the secretary of state’s website. The amendment form is different in every state. So, make sure that you only use the amendment form of your state.

Fill this form and submit the same to your state. Most states have a fee for filing this amendment form.

Step 3- Notify Licensing and Taxing Agencies

Once you submit this form, the next step is to notify the name change to license and tax agencies. In some states, you get a certificate after you file the amendment form. Some of the licensing agencies might require you to provide a copy of this certificate to change your LLC name in their records.

Similarly, you will also have to notify local, state, and federal tax authorities.

Step 4- Changing LLC Name on Business Accounts and Other Business Documents

To change the name of your LLC, you will also have to change the name on your business accounts. Moreover, you should also notify about the name change to your suppliers, vendors, lenders, and landlords. If you have a website, the same needs to be updated with the new name as well.

Once all of this is done, you will also have to change the business name on your brochures, business cards, stationery, and signage. Your customers would also need to know that you are changing the name of your LLC. You can do this with the help of advertisements.

This is it! You now have a new name for your LLC.

Why Do LLCs Prefer DBA?

As you can see, the LLC name changing process can be very time-consuming. As a result, a lot of businesses prefer applying for a DBA (Doing Business As) or fictitious business name unless the name change is due to a serious reason.

It allows businesses to get a new trade name for the products or services it offers while the legal name of the business remains the same. In comparison to legally changing the name of your LLC, applying for a DBA is easier and less expensive in most cases.

An entrepreneur can operate several businesses under the same LLC by applying for several DBAs.

Changing Name of Foreign LLCs

If you have operations in multiple states, your LLC registration in those states might be as foreign LLCs. If you want to change the name of your LLC, you will have to file the amendment form in each of the states where your foreign LLC is registered.

This is another reason why most LLCs prefer applying for DBAs.

Name Change in Case of Typographical or Spelling Error

A lot of times, LLCs want to correct their business name and not entirely change it. This is generally the case with new LLCs that sometimes have a typographical or spelling error in their name.

To correct the name of your LLC, most states offer something known as a “Certificate of Correction“. Just like the amendment form, you will have to submit this certificate of correction to the state for correcting the LLC name.

Conclusion

Changing the name of your LLC is a decision which you should only take if the name change makes some business sense. In all other cases, it is better to apply for DBA which will allow you to use another business name while keeping the same legal name of your LLC.

While the steps for changing LLC name are almost similar in all the states, make sure that you do check the secretary of state’s website to know more.

The post How to Change LLC Name? appeared first on .

source https://businessentity.org/learning-center/how-to-change-llc-name/

Choosing a Name for Your LLC

Selecting a name for your business is one of the most important and often challenging aspects of starting a new LLC.

With so many things like business licenses and permits, LLC registration, and more already on your mind, coming up with a name for your business can be stressful.

You want to make sure that your LLC name is unique and relates to your products or services as much as possible. It should be easy to pronounce and remember, and most importantly, it has to meet the legal naming requirements of your state.

So, how are you planning to come up with a business name? To make things easier, we have a few valuable tips that are sure to help.

Meeting the Legal State Requirements

When thinking about a name for your LLC, you first need to make sure that the name you select matches the naming requirements of your state. In most of the states, there are some restricted words which you cannot use in a business name. Similarly, there can be some mandatory words too.

For instance, in a lot of states words such as “insurance”, “certified”, “federal”, and “bank” cannot be used in an LLC name. The states generally maintain a list of such restricted words on their Secretary of State website. Go through this website first to know about the words which you cannot use in your LLC name.

With regards to mandatory words, most of the states require you to add “LLC” or “Limited Liability Company” in your LLC name.

After going through the list of restricted and mandatory words, you can then start thinking about the name. 

Choosing the Perfect Name for Your LLC

Here are a few tips to make the selection easier:

Understand Business Foundation

While you might be having several options in your head, the easiest way to come up with an LLC name is to review your business foundation. You can go through your business plan, mission statement, and your USP to come up with something that easily relates to your business.

Also, consider your target audience when thinking about the name. Focus on the type of audience you want to target and what you want them to feel and think when they hear your business name.

Select a Name That Is Memorable and Meaningful

It is essential to ensure that your LLC name is something that people can easily remember. Having a memorable name is crucial as it is possible that your customer or client will prefer you over your competition if they remember your name. The name should also be easy to pronounce and not too long unless it is necessary.

Your LLC name will also play an influential role in your marketing strategies. So, prefer something meaningful rather than something that is just fun and engaging. Just by listening to your LLC name, people should understand what type of products or services you offer.

Be Unique

A lot of times, uniqueness becomes more important in comparison to being meaningful and memorable. This is often the case for businesses that have a lot of competition. Your LLC name should be something that makes you stand out from the competition.

With advertising channels and modern media getting increasingly popular, you do not want your LLC to be one among hundreds of companies with similar names. So, try to be unique, and if that requires you to select a name that is not very meaningful, you should still go ahead if that makes business sense.

Consider Your Future Business Goals

When naming your LLC, you should also consider what you’d like to do with your business a few years down the line. A lot of enterprises expand to other states after setting their foot in the state of their initial registration. If you have similar plans, do consider the same when selecting a name for your LLC.

For instance, California Rentals can find it very difficult to rebrand itself if it decides to expand to another state in the future. So, avoid selecting something that can result in problems down the line.

Think About Your Online Presence

After registering your LLC, you will surely want to create a business website and also promote it on social networking platforms. When selecting the name, do a quick search to see what domain names you can get for your LLC. It is possible that someone might already have a domain name registered to that name.

Similarly, also go through the popular social platforms to make sure that your LLC name or some variant of the name is available for creating social pages.

Check Name Availability

By now, you might already have a few good name options for your LLC. Note that it is possible that a business might already have an exactly similar or almost similar name in your state. In such cases, you will not be able to go ahead with the name.

In most of the states, you can now check the availability of business names online. Check the Secretary of State website to know more about this.

To make the search easier, we’ve created a step-by-step guide on how to check for business name availability across all 50 states. Here is the Link (Opens in new tab).

Also, check the trademark database of the US Patent and Trademark Office. While the name you are planning to select might be available in your state, it is possible that some US company might already have a patent or trademark on that name.

Examples of Good vs Bad LLC Business Names

• The Google Marketing Services LLC – Bad, Infringes trademark of Google.
• STD Contractors LLC – Really bad, offensive/inappropriate
• Best Alaska Landscaping Contracts LLC – ok but not that great. Too long and boring
• Alaska Landcapers LLC – Great name, short and sweet.
• Epic Web Media LLC – Good name

Conclusion

Coming up with a good LLC name is worth the effort and time as it can significantly impact your future business. The name will help you create a brand and play a significant role in helping you achieve your business goals.

So, rather than selecting something random, use the tips discussed in this post to come up with a great LLC name. Even if this requires you to spend a lot of time and efforts, do it as it will all be worth it in the end. You can also consult your family, friends, employees or clients and they might help you come up with something that ticks all the right boxes.  

The post Choosing a Name for Your LLC appeared first on .

source https://businessentity.org/learning-center/choosing-a-name-for-your-llc/

LLC vs. S Corp – Differences and Tax Implications

The structure you select for your business significantly impacts several crucial business issues. This includes liability exposure, financing, business growth, tax implications, and more.

Among all the different business structures, LLCs and S Corp are very popular. Both the structures offer limited personal asset protection along with pass-through taxation.

But while both the structures offer this basic business benefits, there are many essential differences between them.

For instance, do you know that S Corp is not really a business structure? Yes, S Corp is just a taxation method for LLCs, and it is not a business structure like LLC or a Corporation.

Moreover, while LLC is a business structure, there is nothing known as an LLC tax structure. An LLC has to select one of the tax structures from options such as disregarded entity, Corporation or partnership.

Confusing, right? Read this post, and you will understand the differences between the two better.

What is an LLC?

An LLC or a Limited Liability Company is a state-registered business entity. LLCs are legally separate from their owners (known as members). LLCs can have a single owner or multiple owners.

Most small businesses prefer LLC structure as it is more credible than sole proprietorship and offers more flexibility in comparison to a Corporation.

What is an S Corp?

While LLC is a business structure, there is no business structure known as S Corp. It is only a designation which refers to how a business pays its taxes.

If you have an LLC, you get the option to select between different tax structures. These options include disregarded entity and Corporation (S Corp or C Corp) for single-member LLCs. If you select the disregarded entity, your taxation will be similar to a sole proprietorship.

For multi-member LLCs, the options are partnership or Corporation (S Corp or C Corp).

LLC vs. S Corp

There are several similarities between LLCs and S Corps such as-

• Both are separate legal entities
• Offer limited personal asset protection
• Are pass-through tax entities
• Have ongoing compliance requirements of the state

But there are some significant differences too. For instance, IRS only classifies business structures like sole proprietorships, Corporations (S Corp or C Corp) and partnerships for tax purposes. There is no separate tax structure known as “LLC tax structure”.

This means that an LLC’s taxation can only be as a sole proprietorship, Corporation or a partnership.

Taxation of LLC and S Corp

Business taxation is based on the net profit or loss of the business. Deductible expenses are subtracted from the sales and revenues for calculating the net profit or loss. Let us have a look at the different options an LLC has for taxation-

 

• Taxation as a Disregarded Entity (Single-Member LLC)

 

If a single-member LLC’s taxation is as per a sole proprietorship, reporting of all the business income and expenses is through the personal income tax of the owner. The owner of a single-member LLC is self-employed and has to pay Medicare and Social Security taxes on the profits.

 

• Taxation as a Partnership (Multi-Member LLC)

 

In case if an LLC is a multi-member LLC with a partnership tax structure, reporting of all the business income and expenses is through the personal income tax of the owners. However, as there are multiple owners in multi-member LLCs, the tax calculation is as per their ownership share.

For instance, if the net profit of a two-member LLC is $100,000 and your ownership percentage is 50%, you will pay taxes on $50,000.

 

• Taxation as an S Corp (Single-Member and Multi-Member LLC)

 

When an LLC is an S Corp, it will pay a “reasonable salary” to the owner who is a working employee of the company. The remaining net income of the business after paying the owner’s salary passes through the personal income tax of the owner.

For instance, let us assume that the net profit of an S Corp is $20,000 after paying a $20,000 salary to the owner. In case of a single-member LLC, you will pay taxes on $40,000 as you are the single owner. The only benefit you can get here is avoiding self-employment taxes.

 

But if it is a multi-member LLC and you have 50% ownership in it, you will pay taxes on $30,000. $20,000 will be the salary from your LLC, and $10,000 is from your 50% share in the net profits of $20,000.

Who Pays More Taxes? LLCs or S Corps?

In most cases, S Corps pay more taxes in comparison to LLCs. This is because they have to pay state Corporate taxes and payroll taxes which may be applicable. Also, salaries which they give to the owner is also subject to disability tax, unemployment tax, Medicare and Social Security tax.

LLCs with single owners do not pay these taxes. But they also do not get the disability or unemployment benefits as LLCs do not pay anything to these funds.

So, Why LLCs Choose S Corp Tax Structure?

A large number of new businesses nowadays are run by independent contractors generally working with a single client. IRS generally prefers hiring of these contractors who function as consultants as employees and not independent contractors. This makes S Corp structure a better option in comparison to an LLC functioning as a sole proprietorship.

Also, LLCs have to pay estimated taxes on its net profits every quarter. A lot of owners are not very diligent with quarterly tax payments and get into serious problems with the IRS. As S Corps use payroll service, tax payments are taken automatically from the salary.

Can Every LLC Be an S Corp?

As per the S Corp definition of the IRS, every LLC does not qualify as an S Corp. Most of the single-member LLCs generally qualify. But there are a few reasons when they cannot. A few of these reasons are-

• Non-resident alien owner of the LLC
• Foreign LLC
• Business structure is as such that the LLC is a partnership or a Corporation

Also, multi-member LLCs which have more than 100 members do not qualify to be an S Corp.

How to Select Between LLC and S Corp?

To select between LLC and S Corp, try to evaluate the benefits of both the structures. For instance, see if the S Corp taxation can help you save more money as compared to a sole proprietorship or partnership taxation.

Focus on the reasonable salary for the owner as the IRS is very serious about the salary of the S Corp owner being reasonable. So, make sure that you do not select something that is artificially lower or higher than what you should receive.

Once you know the reasonable salary, see how much profit the business will be left with. If the leftover profit is not considerable, S Corp might not be the right choice for you. But if the gains are significantly higher after deducting your salary, S Corp taxation can help you save money.

But if you do select S Corp structure, note the tax return filing process will be more complicated. Also, if you are a single owner, you will also have to work on tax withholding.

Conclusion

There are only a few cases where an LLC can significantly benefit from electing the S Corp tax structure. Most businesses, as a result, prefer being a sole proprietorship or partnership. Some of the LLCs also go with the C Corp structure.

As a lot of intricacies are involved in this decision, consult a professional lawyer or accountant to help you make the right choice.

The post LLC vs. S Corp – Differences and Tax Implications appeared first on .

source https://businessentity.org/learning-center/llc-vs-s-corp-differences-and-tax-implications/

How to Properly Close an LLC Properly | Step-By-Step Guide

If for some reason you want to shut down your LLC, it can be very tempting just to shut your operations and skip the legal formalities.

But just like there are steps to form an LLC, there are steps to close an LLC as well.

Without following the correct legal steps for LLC dissolution, there can be many serious legal troubles.

For instance, if an LLC owns any property, it is only after correctly closing the business that the property will personally belong to the owner. But if you do not follow the steps, the property will continue to be in the name of your LLC. You cannot claim it to be your personal property.

Similarly, there can be many other problems related to state fees, business bills, filing requirements, permits, and more.

Why get in all these troubles when you can legitimately close your LLC easily? Most states in the US have clear laws and provisions for shutting down an LLC and avoid any lawsuits or debt liabilities.

If you are planning to shut down your single-member or multi-member LLC, read this post to know the exact steps you should follow to close your LLC.

Note that the steps can slightly vary between states. But they are more or less the same in most of the states.

Step 1- Vote to Dissolve

To close an LLC, the first step is to take a formal decision that you actually want to dissolve your business. This is easy in case of a single-member LLC as you are the only one to make the decision.

But if you have a multi-member LLC, you will have to call a meeting of all the members for confirming the decision. In most states, the standard majority dissolution vote is applicable. But there are some states where a 2/3rd majority vote is required.  

Moreover, there are also a few states where every member of the LLC has to give their confirmation to dissolve the LLC in writing. You can check the dissolution requirements of your state to know more about this.

Step 2- Informing the Secretary of State

Now that the decision is final, the next step is to inform the same to the Secretary of State. The official website of your Secretary of State will mostly have a form for dissolving LLCs.

Fill this form and submit the same with the state. The department will then go through your application and will formalize the LLC dissolution. After this step, your LLC name will be legally closed down by the Secretary of State.

Step 3- Formal Notice

Once the LLC members have made sure that they want to close their LLC, they also have to give a formal notice about the same to all the creditors.

In case if they want to file any lawsuit against your LLC, this will allow them to know the timeframe within which they should proceed with the suit before you shut down your LLC. Some states require dissolving LLCs to publish about it in local newspapers.

The rules vary between states. So, check with the Secretary of State to know how long before dissolution do you have to publish the notice. Also, go through how and where the notice should be published.

Step 4- Managing Finances

The next step is managing the finances of your LLC. Before closing your LLC, you have to clear all the outstanding bills of your business. You will also have to make provisions for any obligations which the owners might currently be unaware of.

Before distributing business assets, an LLC should first clear all of its debts. Every owner of the LLC is personally liable to creditors, and they can take legal actions against the owners if their dues are left unpaid.

You will also have to cancel all your vendor accounts, utility accounts, and also inform your customers or clients about the LLC closing its operations. Your employees should also know the closing date of your LLC, and you should also pay their salaries appropriately.

Step 5- Tax Obligations

When closing an LLC, one of the most important steps is to manage the taxes. You will have to close the tax accounts of your LLC with the IRS as well as the state by paying the taxes if you owe any. Also, check that the sales taxes and payroll withholding is up to date.

When filing the final tax return, check the box which says this is your final tax return for your LLC. After filing the Schedule K-1, pass its copy to each of the LLC members so that they can pay appropriate business taxes through their personal income tax.

LLCs also have an EIN (Employee Identification Number). You need to inform the IRS  that you do not require your EIN anymore.

Step 6- Closing Bank Accounts and Cancelling Business Permits

After managing the finances and taxes, the next step is to close all your business accounts. Close or cancel your business insurance accounts, licenses, permits, and registrations.

Once you do this, create a copy of everything and keep them safely with you for at least seven years in case if you are audited.

Step 7- Dividing LLC Assets

After paying the debts and taxes, the remaining assets of the LLC can be divided between the members if it is a multi-member LLC. If you are the single owner, the assets will now belong to you.

The division of assets should be according to the ownership share of every LLC member as per the operating agreement of the LLC. The LLC is considered legally closed after the completion of this final step.

Conclusion

While all of this might seem too much, know that this is the only correct way to avoid lawsuits or debt liabilities. Once you have decided that it is time to close down your LLC, go through the state requirements for shutting down the operations of LLC to know more about the steps mentioned above.

Most LLC owners rather than handling this process on their own, prefer working with tax professionals and attorneys. You too can do the same to avoid any discrepancies in the future.

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source https://businessentity.org/learning-center/how-to-close-an-llc/