Legal Question in Business Law in Florida

Request advice in forming a tax-efficient organization!

Single-member profitable FL LLC is looking to form a tax-efficient structure that is also minimizes liability. Ideally, we would like to file with the IRS as an S-Corp but have some questions. First, can an LLC that is filed as an S-Corp distribute profits not according to ownership %? Does it make sense to bring in a 2nd member to become a multi-member LLC in order to relatively limit liability versus a single-member LLC? In additional, what implications would there be from a state tax standpoint for the owner paid as an employee (if using an LLC S-Corp IRS filing structure) not residing in the state of incorporation? Thanks!


Asked on 11/03/07, 2:27 am

1 Answer from Attorneys
Euribiades Cerrud II The PCB Firm, P.A.

Re: Request advice in forming a tax-efficient organization!

The single member LLC cannot enjoy a tax-efficient structure because the IRS will treat the member as self-employed. If you have two or more members you may enjoy the benefits of treating the LLC as a pass-through entity (S-corp) or as a corporation for tax purposes. Accordingly, if there are two or more members of the LLC you can distribute profits not acording to ownership - this means that the capital accounts established according to your operating agreement must be adjusted. Your liability withing the LLC will remain the same as with a corporation - absent any gross negligence or other over act that would cause the court to "pierce the corporate veil" - limited to your investment and the corporate assets. I would recomment you contact a certified public accountant to discuss the tax implications of the structure you proposed.

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Answered on 11/03/07, 1:38 pm


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