Should I choose to have my LLC taxed as a corporation, or as a separate entity?

**EntreProducer** · 06-03-2008 05:21 PM

I'm filling out the papers to form my LLC. It gives me this option:

"...The limited liability company is to be treated for purposes of federal income taxation as:

(my options are)
- a partnership
- a corporation
or
- disregarded as an entity separate from its member

can anybody clear this up for me? what exactly would each of these options entail, and what should I choose?? Thanks!

**JLeezer** · 06-03-2008 05:33 PM

In most cases, it is advisable that unless there are specific reasons for being taxed as anything other than a disregarded entity, an LLC should be treated as such. A specific reason that comes to mind would be if the organizers/members of the LLC are or expect to be in a very high tax bracket personally, they may benefit from being taxed as a corporation. This, plus several other reasons, should be discussed thoroughly with a tax strategist (usually a CPA specializing in tax planning for business owners). Sorry I can't give you anything more than "it depends, but most tend to..." kind of answer.

**BusinessAdviser** · 06-03-2008 10:06 PM

Originally Posted by JLeezer

In most cases, it is advisable that unless there are specific reasons for being taxed as anything other than a disregarded entity, an LLC should be treated as such. A specific reason that comes to mind would be if the organizers/members of the LLC are or expect to be in a very high tax bracket personally, they may benefit from being taxed as a corporation. This, plus several other reasons, should be discussed thoroughly with a tax strategist (usually a CPA specializing in tax planning for business owners). Sorry I can't give you anything more than "it depends, but most tend to..." kind of answer.

This answer confuses me. You're likely looking to be taxed as a "Partnership" whereby the tax liability will pass through the entity to you personally, just like a ... partnership.

**EntreProducer** · 06-04-2008 12:11 AM

I'm confused now.. Wouldn't the taxes liability "pass through" to me if I choose to be taxed as being "disregarded as an entity separate from my LLC"?