vince

Securities law

If the LLC is manager managed interest in the LLC may be classified as securities since non managing members may be investing money in a business they are not actively participating in. Generally w...

Manager Management

Select manager management in your articles or operating agreement. An LLC can be managed by a single or group of managers from: one or more members one or more non-members a combination of the two ...

Member Management

All members manage the LLC. This is common because many LLCs are small and all members are active in the business

LLC Management

An LLC can have Member Management (default) or Manager Management (one or more managers chosen by the members). This is usually specified in the LLC certificate and chosen when filing the LLC

History of Double Entry Accounting

Double Entry: How the Merchants of Venice Created Modern Finance https://www.amazon.com/Double-Entry-Merchants-Created-Finance/dp/0393346595

Double-Entry Accounting

Assets = Liabilities + Equity This accounting equation is the foundation of double-entry accounting. If at any point this equation is out of balance, that means the bookkeeper has made a mistake so...

How LLCs report and pay federal income taxes

For single member LLCs the owner simply files her regular 1040 and attaches Schedule C, Profit or Loss from Business (Sole Proprietorship) to report allocated LLC profits or losses Schedule SE, Se...

Profit distribution

Co-owned LLCs typically don't pay members a salary and instead simply share the net profit each year or quarter - you can decide to pay out the profits or keep them in the LLC. Income taxes are cal...

Pass-Through

This is the default for new LLCs. It just means that the LLCs profits and losses are reported directly each member's tax returns

LLC Taxes

An LLC can be taxed either as a pass-through a corporation

Safe Harbor Rules for Special Allocations

These rules make sure that your special allocations have "substantial economic effect" for the IRS -- adopt the safe harbor language in your operating agreement Requirements: Maintenance of capital...

Special Allocations of Profits and Losses

This is when profits and losses are distributed differently from the ratio of the member's capital interest. This is subject to specific IRS tax regulations that state that special allocations are ...

Distributive Shares

This is the share of the profit and losses allocated to each member. It's sometimes called a "profits interest" in the LLC. The distributive share is usually specified in the operating agreement. U...

LLC related definitions

Membership interest: The percentage share that a member owns in the LLC. Also called ownership interest or capital interest. Tax basis: The basis that the membership interest was set when becoming...

Converting an existing business into an LLC

In most cases the assets and liabilities of the existing business/partnership are simply transferred to the LLC with the same ownership percentage as before. For example A and B convert their 50-50...

Paying with borrowed money

This avoids having to pay taxes for getting shares (interest) in exchange for services performed. A member can simply borrow money and buy interest in the LLC outright. This borrowed money can be f...

Paying with Services

When a member receives interest in the LLC in exchange for services. This is treated as income equal to the value of the interest the member receives and must pay income tax on it (even if the memb...

Paying with appreciated property

If a member transfers property to a LLC that has appreciated since the member purchased it (or inherited or received as a gift) then no taxes are due until the LLC sells it. The tax basis is set at...

Encrypt your HD on a Mac

Open Disk Utility Click on "Encrypt" Choose APFS encrypted

  • Updated 2 months ago by vince
Paying with property

A member can transfer title to property or give equipment, patents, trademarks etc in exchange for interest in the LLC. If the other LLC members agree on the value of the property there is no legal...