Should I make my LLC single or multi member? Candy J Utah
It is almost always best to be a multi member LLC . In some states it is essential. If there is more than one member in your LLC, then for legal and tax reasons the property held in the LLC is considered owned by the business. If you are the sole member then the property can be interpreted to be your asset. The Courts and the IRS can come after those assets when you get in trouble. If there are multiple members then those assets are considered property of the business and there will be no claim against them.
There is one slight advantage to a single member LLC. If you are the sole owner of the entity (single member LLC) you can choose to be taxed as a sole proprietor or corporation (C or S). If you are willing to be taxed as a “sole proprietorship,” then you don’t need to get an EIN (Employee Identification Number). You will still operate as an LLC, but it will be a “disregarded entity” in the eyes of the IRS. For tax purposes you will file a Schedule C on your 1040 return, just as if you were a sole proprietor. Yet, you will still have the liability shield of the LLC. The form of taxation has nothing to do with the liability shielding. So for a single member LLC, the taxes are easy and you get the liability shield.
I don’t understand what an LLC entity classification is and how to get it? NS
When you file an LLC you can choose to elect how your new business will be classified for tax purposes. If your LLC has two or more members you can choose to be classified as either a corporation or a partnership. If you are the only member of your LLC you can choose to be classified as a corporation or sole proprietorship. You must file Form 8832 to elect your LLC’s classification. If you do not file the form, your LLC will be classified, under the IRS default rules. The default rules provide that if your LLC has two or more members it will automatically default to a partnership. If you are the only member of your LLC it will automatically default to the classification of disregarded entity. The disregarded entity files as a sole proprietorship tax form.