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What would be the combined fed+state corporate income tax rate for a Delaware LLC? Quick google says this is 21% (federal) + 8.7% (Delaware). Is my understanding of this correct, that a Delaware LLC pays 29.7% taxes on its profits?
Earlier quoted context omitted.
Yep. An LLC* is not taxed as a corporation unless it chooses to be, by default it is taxed as a sole proprietorship (and so the owner would pay income tax). This is known as a disregarded entity” at the federal level. Also watch out for franchise taxes - if you live in California it’s $800/yr minimum. * Edit: a single-member LLC
Pretty sure you can only be a "disregarded entity" (schedule-c) with a single member LLC. Beyond that is get's more complicated.
> Is designed to make conversion to a C Corporation as simple as possible. (We can connect Stripe Atlas users to a lawyer to manage the conversion process with discounted, flat-rate packages). This is the most important part. LLCs tend to be cheaper and more flexible before you raise money, but a C-Corp is basically necessary to raise money. Converting an LLC to C-Corp conversion is often quoted at about $10K from a…
This is all very cool. But: don't operate a multi-partner company in any form, LLC or C-Corp, without formal vesting. Companies without vesting are rigged to explode if any member leaves.
>if any member leaves. This brings up a very interesting issue under the Delaware Limited Liability Company Act, that is without an Operating Agreement in place that allows a Member to resign their ownership, the Delaware Law is controlling and does not allow a member of a multi-member LLC to withdraw (resign their interest) prior to dissolution and winding up of the company. One may be able to get the other member(s…
This is all very cool. But: don't operate a multi-partner company in any form, LLC or C-Corp, without formal vesting. Companies without vesting are rigged to explode if any member leaves.
>if any member leaves. This brings up a very interesting issue under the Delaware Limited Liability Company Act, that is without an Operating Agreement in place that allows a Member to resign their ownership, the Delaware Law is controlling and does not allow a member of a multi-member LLC to withdraw (resign their interest) prior to dissolution and winding up of the company. One may be able to get the other member(s…
I'm 100% sure it does. The description talks about things like being split into 10,000,000 units, for example, which is definitely not in the Act.
Earlier quoted context omitted.
Yep. An LLC* is not taxed as a corporation unless it chooses to be, by default it is taxed as a sole proprietorship (and so the owner would pay income tax). This is known as a disregarded entity” at the federal level. Also watch out for franchise taxes - if you live in California it’s $800/yr minimum. * Edit: a single-member LLC
How is an LLC taxed with foreign members? Is it tax exempt in the US and does the income accrue to the partners (i.e. foreign companies and/or people)?
For multiple members it will be taxed as a corporation.
> Is organized in Delaware, the jurisdiction of choice for many new LLCs. Be aware that if you are "doing business" in California which means you live there you also have to file as a California foreign entity and pay the absurd anti-small business flat tax of $800 a year. This also does not include your state income tax liabilities in California. Just because the LLC is formed in Delaware does not mean you don't hav…