Those with the entrepreneurial spirit are at the very core of the American economy. The men and women who have an idea and find a way to make that idea a business are living out the American dream.
While there are multiple options on the structure of your new business, a Limited Liability Corporation, or an LLC is among the most popular. The IRS defines an LLC as “a business structure allowed by state statute.”
LLC’s are popular primarily because most states allow a variety of ownership structures, including corporations, individuals, foreign entities, and other LLC’s. With the exception of very few businesses, such as banks and insurance companies, virtually any company can be formed as an LLC.
The IRS will treat an LLC as a corporation, a partnership, or a part of the owner’s tax return based on a variety of criteria. Those criteria are why it is so important to have an attorney on hand who is well-versed in corporate and business law.
The way that you initially set up your business will have a far-reaching impact on the way that things work from that day onward. The IRS references the way that the company is structured on its effective date of election to determine that corporation’s tax classification. While there are steps that can be taken to file for reclassification, the way that your company is classified by the IRS is of utmost importance.
A client who is considering taking the steps to enter the world of business ownership needs to work with a lawyer who is familiar with both state and federal regulations. In addition to working with an attorney who is capable of helping set up a business, clients should also look for an attorney who works in employment and labor law.