Buying or Selling an LLC

A lot of new businesses and startups are structured as LLCs because they are easy to run, cheap to set up, and flexible. These LLCs are usually taxed as partnerships under the Internal Revenue Code and receive the beneficial flow-through treatment for income tax purposes (not all LLCs are partnerships; some can be S Corporations or C Corporations - see check the box regulations). A lot of times, the owners of these LLCs treat the partnership as if it were the same as their sole proprietorship. That is a big no-no. There are many negative tax and legal consequences of doing this. The LLC should be treated as a separate entity in most instances (there are exceptions to this general rule).

Read More