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Also, if you are wondering what a K-1 is, consider it as a W-2 provided by an employer to report the worker's earnings on their specific tax return. Lastly, it is extremely uncommon that I would ever suggest that an independent professional, such as a property representative or Real estate agent, form a multi-member (P) LLC.

In order to have the (P) LLC taxed as an S or C Corporation you will complete documentation and submit it with the Irs (IRS), not with the State in which you formed your (P) LLC. Why would I desire my (P) LLC dealt with as an S or C Corporation. The information of why you would desire your (P) LLC dealt with as an S Corporation are beyond the scope of this post, nevertheless, the primary reason is to conserve money on self-employment taxes (Social Security and Medicare aka FICA).

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I am defining earnings as your commissions/revenue minus your expenses such as marketing and mileage. Till then, your single-member LLC is finest left as being dealt with as a sole proprietorship for tax functions. This is why the (P) LLC is so popular it can be taxed as a sole proprietorship to start, and as soon as you've crossed the $40,000 profit threshold, you can make the S Corporation election.

Basically, if your (P) LLC was going to raise capital by becoming a publicly traded company, such as Amazon, you would make the C Corporation election. What is a P.A./ Corporation (from a Legal Point Of View)? A Corporation is a service structure produced by state law that provides minimal liability security from its owner( s), which are called investors.

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For example, if your Corporation is sued (and you've kept your Corporation properly) your personal properties such as your home, cars, savings account may be protected.  Additional Info  of defense is typically referred to as the "corporate veil". Please note that because the Corporation business structure is developed by state law (instead of federal law), the protection afforded to the Corporation will vary by state and consulting with an organization attorney within your state is advised.

mean Professional Association. Nearly all states require you to form a P.A. (instead of a Corporation) when you are a certified expert (e. g. a Property Representative, Lawyer, Certified Public Accountant, etc.). The P.A. is similar to the PLLC. Non-licensed individuals form LLCs and licensed people form PLLCs. What is a P.A.