What confuses business owners about an LLC
1. Legal
An LLC is a legal entity that should separate the activities, assets, and liabilities of the entity from those of the owners. Consult an attorney to ensure proper implementation and legal protections.
2. Taxation
An LLC is not an indicator of how you file or how you're taxed. An LLC can report activity on:
- Form 1040 — Schedule C for business activity
- Form 1040 — Schedule E for rental activity
- Partnership Form 1065 (frequently the default multi-member filing)
- C-Corp Form 1120 as a separate tax-paying business
- S-Corp Form 1120-S as a small-business pass-through entity
How we help
We model the tax cost of each treatment against your projected income, distributions, state of formation, and long-term exit — so the entity you form is the one that actually minimizes your total tax bill.