After you have ascertained that the your business will be set up as a Limited Liability Company (LLC), you can straight away sent in your application for the Employer Identification Number (EIN) to the Internal Revenue Service (IRS). For the application, you will have to provide the legal name and social security number of the managing director. He or she should be a member of the LLC. It is for the purpose of the Tax ID.
A Limited Liability Company (LLC) is one of the most common entity type utilized by businesses because:
- it is a flexible business structure
- protects your personal assets from being at risk
- no taxes at the corporate level
- flexibility to structure your company to fit your needs.
The owners of the LLC are called members. These members may include individuals, corporations, other LLCs, and foreign entities. There is no limit to the numbers of members in forming an LLC.
A single member LLC is a lone member establishing the LLC. The company is taxed as a sole proprietor where profits and losses are passed through the individual’s federal tax return to the IRS. For a multi-member LLC where there are more than one person as members, it is taxed as a partnership. The profits and losses are passed through to the individual members’ federal tax returns. They can also choose to be taxed as a corporation instead of a partnership. If the LLC is formed by a husband and wife, they may choose to be taxed as a single member LLC.
The main reason many choose to form an LLC company is because of the provision of liability protection. Creditors cannot go after the personal assets of the owners to pay off company’s debts. The personal assets of the members of the LLC are not at risk and creditors cannot lay their hands on them.
If there is a change of your LLC mailing address or business location, IRS and other agencies will have to be informed. If there is a change in the person who is responsible to act on the behalf of the business, the IRS has to be informed by filling up the necessary form. This is to ensure that your LLC business will continue to run smoothly. It will also ensure that you will continue to receive whatever notification sent out by the state and federal government agencies.