Many single-member LLC owners believe that if the LLC is sued, they cannot be sued, and this is NOT TRUE.
Because the LLC is not incorporated (A business is incorporated when it has been granted a charter legally recognizing it as a separate entity having its own privileges, rights, and liabilities distinct from other businesses and persons), they believe they are untouchable. Well, this is what the IRS automatically classifies a single-member LLC as a disregarded entity.
In today's video, we're diving deep into a commonly held belief among new business owners: the idea that forming a Limited Liability Company (LLC) magically separates you from your business. But, hold on – is this really the case? Join us as we debunk the myth and explore the real connection between you and your venture.
The Illusion of Separation: Many entrepreneurs rush to establish an LLC, thinking it provides a clear line between themselves and their business. But can anyone truly be separated from something proudly carrying their name? Let's question the narrative and uncover the reality.
Seeing is Believing: We've got visuals! Compare the EIN numbers for an LLC and a Corporation side by side. One bears your name; the other doesn't. It's a visual representation that speaks volumes about the often-overlooked connection between you and your business.
Understanding "Separate": Explore the definition of "separate" and see how it challenges the idea of complete detachment when your business proudly bears your name.
Tax Time Revelations: Find out the shocking truth about tax season – despite the legal structure, you might be considered a sole proprietor, personally shouldering the responsibility for your business's income, losses, and deductions.
Sole Proprietorship Reality: Being taxed as a sole proprietor is an intimate connection that challenges the notion of separation. The IRS defines it, and we break it down.
The Corporation Solution: Discover the path to true separation by forming a Corporation. The paperwork doesn't bear your name, and the IRS recognizes your business as a separate entity. It's a game-changer for those seeking genuine detachment.
Conclusion: As we navigate the intricate world of business ownership, let's challenge common narratives and debunk the myth that an LLC inherently separates you from your business. True separation comes with choosing the right business structure that aligns with your goals – and, spoiler alert, it might just be the Corporation route.
Remember, "Price is what you pay, value is what you get." Challenge the status quo and embrace the truth that your business is an extension of yourself.
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