Frequently Asked Questions

What is the process to set up a Single-Member Limited Liability Company (SMLLC)?

Setting up a Single-Member Limited Liability Company (SMLLC) involves a few key steps. Firstly, you need to draw up articles of incorporation and file these papers with the secretary of state's office, along with paying a fee. This is part of the minimal regulatory compliance requirements that make forming an SMLLC advantageous. Once your SMLLC is established, you have the option to elect to have it taxed as a corporation. If you choose not to do this, your SMLLC will be treated as a disregarded entity and you will report your self-employment income on Schedule C. This can be beneficial, especially if you are in a state with a high minimum tax fee for regular LLCs. To further protect your business, it's recommended to create an operating agreement that outlines how the LLC functions. This provides limited liability protection for business debts. In terms of taxation, your SMLLC is taxed as a sole proprietorship. When filing your taxes, you will need a Schedule C to attach to Form 1040, which lists income and deductions.