Frequently Asked Questions

What are the benefits of forming a Single-Member Limited Liability Company (SMLLC)?

Forming a Single-Member Limited Liability Company (SMLLC) comes with several benefits. Firstly, the process of setting up an SMLLC involves minimal regulatory compliance requirements. You only need to draw up articles of incorporation, file them with the secretary of state's office, and pay a fee. Secondly, an SMLLC can be taxed as a corporation, which can be beneficial in states with high minimum tax fees for regular LLCs. If you choose not to be taxed as a corporation, you are treated as a disregarded entity and report your self-employment income on Schedule C, saving on tax preparation fees. Thirdly, SMLLCs offer limited liability protection, providing a safety net for business debts. However, it's important to note that this protection is not as strong as it is for regular LLCs. In addition to these benefits, SMLLCs also offer tax advantages. For instance, if your SMLLC operates from home and employs friends and family, you can realize savings through IRS deductions. These deductions can include home office expenses, mileage reimbursement for business use of your car, monthly cell phone line costs if used for business, and licensing fees.