Nolos guide to single-member llcs pdf download

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Please reference the Terms of Use and the Supplemental Terms for specific information related to your state. By David M. Steingold , Contributing Author. If you want to start and run a Washington limited liability company LLC , you'll need to prepare and file various documents with the state. This article covers the most important ongoing reporting and state tax filing requirements for Washington LLCs. The State of Washington requires you to file an annual report also known as an annual renewal for your LLC.

The report must be filed online at the Secretary of State website. The initial annual report must be filed within days of the date you filed to create your LLC. Subsequent annual reports are due on dates determined by the Secretary of State. You should receive a notice from the state approximately 45 days before a report is due. When it comes to income taxes, most LLCs are so-called pass-through tax entities.

In other words, the responsibility for paying federal income taxes passes through the LLC itself and falls on the individual LLC members. Washington is one of only a very few states that does not have a personal income tax or a corporation income tax. Consequently, for most LLCs, including those that may have elected to be taxed as corporations, no state income taxes are due.

An LLC selectively combines some of the most desirable features of older, more traditional business structures like corporations, partnerships, and sole proprietorships. Those features include the limitation on personal liability that you get with a corporation and the pass-through taxation and flexibility of management that you get with a partnership or sole proprietorship.

SMLLCs are specifically authorized by statute in every state. Protection from personal liability generally is considered the most important benefit you get from organizing your single-owner business as an SMLLC.

Pass-through taxation and flexibility of management which also apply to sole proprietorships but not corporations are two other benefits. However, beyond liability protection, pass-through taxation, and flexible management, LLCs can have other, less commonly discussed benefits.

Two worth mentioning are privacy and prestige. There are methods you can employ to make it difficult for other people to know who actually owns your SMLLC. Additional steps may be necessary. These methods are permissible in some states but not others.

However, you will have to check around to find a state that has favorable LLC privacy rules. Anonymity similar to what you can achieve with an anonymous LLC generally is not available when operating a sole proprietorship. Many people believe that operating as an SMLLC, as opposed to a sole proprietorship, makes a business appear more impressive and reliable. Not every small business, and certainly not every one-owner business, needs what an LLC has to offer.

As just mentioned, sole proprietorships, too, have pass-through taxation and flexibility of management. Consequently, most business owners, and especially those who are sole owners, consider liability protection as the key issue in deciding whether to form an LLC.

This chapter focuses on that particular benefit. If you are the sole owner of a small business and you choose not to give it any legal structure, your business will be considered a sole proprietorship by default.

This means:. By contrast, if you organize your one-person business as an SMLLC, you generally will not have personal liability for debts, injuries, or damage caused by your business. So, with the liability issue in mind, what kinds of one-owner businesses can benefit by being structured as SMLLCs? The simple answer is: businesses where there is at least a small chance of significant liability.

A few examples will make this clearer. However, for the five years since finishing college she has worked nearly full time as an assistant manager at a retail store.

Six months ago, Rosa started doing freelance website development work from her home for several businesses in the state where she lives. On an hourly basis, Rosa earns a lot more from the freelance work than she gets from her assistant manager job. Rosa already has most of the hardware, software, books, and other supplies she needs to run her freelance operation so there is little chance it will put her deeply into debt.

He calls it the Carbo-Lite Carriage. The new design is made out of special lightweight carbon, making it easier than ever for parents to jog with their babies.

It also looks really cool. After having built some prototypes on his own, and seen some local interest in the product, Robert now wants to hire a couple of part-time employees to help him ramp up production. He also wants to open a small local store to sell the stroller.

Robert will need to get loans to make this happen. Distinctive aspects of SMLLCs are apparent when it comes to basic LLC matters like operating agreements, member meetings and resolutions, personal liability, and taxation.

In some cases, these distinctions result from the fact that many of the structural elements of LLCs are adapted from laws and rules for corporations, and those laws and rules frequently assume that businesses are owned and operated by more than one person. Operating agreements. Where corporations have bylaws to help guide a group of directors, LLCs usually have operating agreements to guide multiple members. This can lead to controversy and dissension, even in the ranks of a closely held LLC, unless you use written minutes, consent forms, and resolutions to keep track of all important LLC decisions and votes.

Although all LLCs should formally record important decisions, some may need more help than this book provides. This book is for smaller LLCs—those that are privately owned and have a manageable number of members up to about 35 and employees up to about 50 —whose members and managers can work together without a great deal of controversy.

If your LLC is larger you will have to contend with a wider variety of viewpoints—and may not be able to count on the cooperation of all members in making or documenting decisions.

In every business, someone must be responsible for managing the day-to-day affairs of the company, and the LLC is no exception. There are two types of LLC management structures. In a manager-managed LLC, the business is managed by just some not all of its members, or is managed by one or more managers who are not LLC members. After all, you want to make sure that all owners all members agree with the important decisions made by the management team.

This book explains, step by step, how to document important LLC decisions, votes, and transactions. The information in this book will help you decide which approval method to use and how to prepare the necessary records.

Start by reading Chapters 1 and 2, which explain some basics about LLCs and the options you have for making decisions. However, you may occasionally face a more complicated decision that has important legal, tax, or financial ramifications—and in this situation, you should get some professional advice.

A consultation of this sort will be far more cost-effective than making the wrong decision and having to fix it later. For information on choosing and using a legal or tax professional, see Chapter Form a Partnership. The information provided on this site is not legal advice, does not constitute a lawyer referral service, and no attorney-client or confidential relationship is or will be formed by use of the site.

The attorney listings on this site are paid attorney advertising. In some states, the information on this website may be considered a lawyer referral service.