This Limited Liability Company LLC Formation Package includes Step by Step Instructions, Articles of Formation, Operating Agreement, Resolutions and other forms for formation of a Limited Liability Company in the State of California.
For U.S. Federal income tax purposes, LLCs are treated by default as a pass-through entity. If there is only one member in the company, the LLC is treated as a “disregarded entity” for tax purposes, and an individual owner would report the LLC’s income on his or her individual tax return. For LLCs with multiple members, the LLC is treated as a partnership and must file the IRS Form 1065. The members of the LLC would be treated as partners and each would receive a K-1 reporting the share of the LLC’s income or loss to be reported on that member’s tax return.
As an option, LLCs may also elect to be taxed as a corporation by filing IRS Form 8832. They can be treated as a regular C corporation (taxation of the entity’s income prior to any dividends or distributions to the members and then taxation of the dividends or distributions once received as income by the members), or an LLC can elect to be treated as an S corporation. Some commentators have recommended an LLC taxed as an S-corporation as the best possible small business structure. It combines the simplicity and flexibility of an LLC with the tax benefits of an S-corporation (self-employment tax savings).