One of the nice benefits of an LLC in Virginia is that you have many choices for how you will be taxed by the IRS.  The choices available to you will depend on whether you’re a single-member LLC or a multiple member LLC. 

If you are a single-member LLC, the default tax status is as a sole proprietor.  This means that if you do nothing else, the IRS will disregard your LLC for tax purposes.  If you choose, however, you may elect to be taxed as either a C corp or an S corp.  An S corp may be beneficial for you because you can avoid some wage taxes on distributions.  in order to elect to be taxed as a C corp or a S corp, please keep in mind that you will need to file an additional form with the IRS.  That form, form 2553, can be found on the IRS website (opens as a PDF).

If you are a multi-member LLC, the default tax status is as a partnership.  This means that if you do nothing else, the IRS will disregard your LLC for tax purposes, and the owners will be taxed on their proportion of income and losses in relation to their ownership share.  If you choose, however, you may elect to be taxed as either a C corp or a S corp.

You should check with your CPA for more information on which tax status would be most beneficial for you.

This entry was posted on Tuesday, May 22nd, 2007 at 11:23 am and is filed under Virginia limited liability companies. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.