If you are looking to start a business in Oklahoma, you’re likely to be presented with a couple of options regarding your desired business structure. Perhaps the most popular include the LLC, or limited liability company. It is a great structure for individuals who are starting companies by themselves or those who may want to protect their family assets. Read on to learn more about the most important part of a business structure, the tax treatment.
One of the biggest benefits of choosing an LLC structure for your business is that you will not have to pay corporate federal income taxes. The company’s profits throughout the quarter are passed through to yourself or the owners if there more than one. However, according to business law, the IRS does request members of an LLC to report any profits and losses that they have incurred throughout the year.
Tax limits with an LLC
One of the most common misconceptions about an LLC is that you don’t have to pay taxes on your profits because they are simply going through your personal account. Although taxes aren’t deducted right away, you do have to file quarterly tax payments on your estimated federal income taxes. In addition, experts also recommended that you do not deduct certain expenses from your business, such as life and health insurance.
Although most of the tax requirements for an LLC are clear, there are certain legal obstacles that a small business will end up encountering. It is incredibly important to address these challenges accurately and promptly. Thus, it’s highly recommended that you work with an attorney who has experience with LLC tax laws.