Limited Liability 13
Critical Formation Errors that Will Destroy Your Business
There are a number of common mistakes many founders make that can destroy everything they worked so hard to achieve. Most occur when there is some business success. Some mistakes are made out of ignorance during the initial filing process with the Secretary of State and others are the result of failing to finish the process.
How to Pay a Shareholder of an S-Corp
When you are just an investor in an S-Corp, ostensibly you do not work for the business and you do not participate in its management as an officer. You are therefore considered limited in your liability and your income from the business based on your ownership share of the business is usually considered passive income.
How to Get Paid in a Limited Partnership
How You Get Paid as A Non-Partner General Manager or As General Partner of a Limited Partnership Is Different. Here Is What You Need to Know
How to Get Paid as a General Partner of Limited Partnership
A partner in a limited partnership that is a decision-maker (general partner) is considered an employee of the business by the IRS and is treated differently than limited partners. Income for general partners is considered earned income and is subject to additional taxes but also to additional potential tax deductions. Moreover, as a general partner, you are exposed to additional liabilities.
How to Pay a Non-Member General Manager of a Multi-Member LLC
In some cases, all the members of an LLC may be investors only and not managers. The business may hire an outside general manager (employee) to make the day-to-day decisions, and therefore, acts as the manager. In this case, the general manager is an employee of the business, but since they are not a member (aka owner), their income is just like that of an employee in any business.
How to Pay a Non-Manager Member of a Multi-Member LLC
When you have an investor in your LLC, who works less than 500 hours in a given tax year for the LLC, and they do not participate in its management, they are considered limited in their liability and their income is usually considered passive income subjecting the income to only federal and state income taxes based on their marginal tax rate.
How to Get Paid in a Multi-Member LLC
A member in an LLC that is a decision-maker (manager) is considered an employee of the business by the IRS and is treated differently than non-manager members. Income for managers is considered earned income and is subject to additional taxes but also to additional potential tax deductions. Moreover, as a manager, you are exposed to additional liabilities.
How to Get Paid as an Owner of a Sole Proprietor or Single-Member LLC
As a sole proprietor or as a single-member LLC you are the only owner, and as a result, you do not take a salary or a wage from a business. Instead, you can simply take out excess cash from the business, which is known as an owner draw, to pay yourself.
How to Get Paid as an Owner of a Pass-Through Entity
How you pay yourself as an owner depends on the type of entity you are and how many owners there are. This post lays the groundwork and defines a few terms that should help demystify how entities pay the owners of the business.
How to Find Out if You Have Enough Money to Buy a Franchise
A question many franchise entrepreneurs have is related to how much money they will need as they conduct early-stage franchise research.
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