You may be a brand-new business owner in Tennessee and excited about the formation of your new company. There are various business structures to choose from that all affect taxes in varying ways. You may be interested in forming an LLC to meet the goals that you have set forth for your business and your finances. Learn more about this business formation below.
What is an LLC?
LLC stands for limited liability company. An LLC is a business structure under the state statute of Tennessee, and your ownership of the business is under the term of a member under the state’s coding. Membership in an LLC has various options including:
- Other businesses and LLCs
- Foreign businesses
It is important to note that if you want to form a bank or financial institution, an LLC is not for you. More rules are available from the business commission of Tennessee.
LLCs and taxes
There are three options for your LLC under the IRS for tax purposes. The first is a corporation, the second is a partnership, and the third is a “disregarded entity” as just the owner. The partnership classification does require two individuals who own the business equally. For the disregarded entity, you should complete Form 8832; otherwise, your filing status is a corporation.
Making tax changes
You can change your tax filing status by Form 8832 as well, which is technically the Entity Classification Election. The change in status cannot occur more than 75 days before the filing date and or more than a year after the filing. There are circumstances in which you can make the change late, but this is up to the state.
Professional legal help
A new business formation is an exciting time for you, and you want to make sure that all the details of your contracts and other legal documents are completed accurately. A lawyer with experience in guiding other owners of successful businesses may assist you in the creation of your new LLC.