Services for LLCs | Natalie C. Papagni, CPA - Tax, Planning & Advisory Services

Limited Liability Company (LLC)
Tax, Planning & Advisory Services

Limited Liability Companies (LLCs) offer flexibility, simplicity, and powerful tax planning opportunities when structured and operated correctly. However, the tax treatment of an LLC is not one-size-fits-all. The optimal approach depends on income level, business activity, long-term goals, and how owners are compensated.

Our Limited Liability Company (LLC) services are designed to support strategy, planning and compliance including:

Entity selection and tax classification analysis
Tax strategy and planning to minimize tax liabilities
Federal and state LLC tax return preparation
Owner compensation and distribution planning
QBI and PTET evaluation
Estimated tax and cash-flow planning
Ongoing advisory support as the business evolves

Work with us and take advantage of our extensive expertise assisting Limited Liability Companies (LLCs) and their members understand and comply with the Limited Liability Company rules of the state where they are registered and states in which they are doing business, evaluated the methods of taxation and their election, efficiently financially manage and control the business, make decisions to minimize tax liabilities, file accurate and efficient tax returns and optimize the benefits of limited liability company business ownership.

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LLCs Can Choose Different Tax Methods

One of the most powerful features of an LLC is that the legal entity and the tax treatment are not the same thing.

Depending on the number of owners and elections made, an LLC may be taxed as:

Disregarded Entity (single-member LLC)
Partnership (multi-member LLC)
S-Corporation (by election)
C-Corporation (by election, less common)

Each tax method has different implications for:

Self-employment taxes
Payroll requirements
QBI eligibility
California PTET planning
Estimated tax obligations
Long-term exit or sale planning

Selecting — and periodically reassessing — the optimal tax treatment is a core component of effective LLC tax planning. Whether you are in-process of forming an LLC or you have an existing LLC and would value an updated assessment of your tax election, reach out to get our conversation started. We are here to help.

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Advantages and Disadvantages of an LLC

Advantages

Flexible tax treatment

An LLC offers flexibility unmatched by other entity types. By default, an LLC is taxed as:

A disregarded entity (single-member)
A partnership (multi-member)

However, an LLC may also elect to be taxed as an S-Corporation or C-Corporation, allowing tax treatment to evolve as income grows.

Operational simplicity

LLCs generally have fewer formalities than corporations:

No required shareholder meetings
No required corporate minutes
Flexible operating agreements

Liability protection

When properly structured and maintained, an LLC can provide legal separation between personal and business assets.

Adaptability as the business grows
LLCs work well for:

New businesses
Variable income businesses
Owners unsure whether S-Corporation treatment is optimal yet

Disadvantages

Self-employment tax exposure

Default LLC taxation can result in:

All net income subject to self-employment tax
Limited opportunity to reduce payroll taxes without an S-Corp election

Less favorable for higher income levels

As profits increase, default LLC taxation often becomes less efficient than an S-Corporation structure.

Inconsistent state treatment

California imposes:

Annual $800 minimum tax
Additional LLC gross receipts fees at higher revenue levels

Specialized Expertise

LLC Taxation Selection Analysis
LLC Tax Strategies & Planning
Federal and State Tax Returns
QBI and PTET Planning & Analysis
Compensation and Benefits
Retirement-plan Strategies
K-1 planning
Optimizing the benefits of LLC business ownership
LLC accounting & bookkeeping
and more

Setting up and operating a Limited Liability Company (LLC) and optimizing the benefits of LLC business ownership may be easier

than you think.

And, the benefits of owning and operating a Limited Liability Company (LLC) may be significantly more attractive than you may have anticipated.

When you are ready to explore the let's get your conversation started.

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Limited Liability Company (LLC)
Frequently Asked Questions

Why do LLC members receive K-1s with no cash distributions?

Taxable income is allocated regardless of distributions. Partnerships often retain cash for operations or debt. This creates tax without liquidity. A tax distribution policy is often necessary.

What are guaranteed payments and how are they taxed?

They compensate members for services or capital and are taxed as ordinary income. They are deductible to the partnership but taxable regardless of profits. They affect self-employment tax analysis. Structure matters.

When is an LLC better taxed as a partnership than an S-Corp?

When ownership flexibility or special allocations are required. Partnerships allow more economic tailoring. They are more complex but adaptable. Complexity must be managed.

How do multi-state LLCs taxed as partnership create tax exposure?

Income may be sourced to multiple states. This can trigger nonresident filings and additional tax. Credits do not always offset cleanly. Multi-state exposure must be planned.

Why are LLCs taxed as a partnership have losses often limited or disallowed?

Losses require sufficient basis and must meet limitation rules. Many losses are suspended rather than lost. High-income owners often discover this too late. Basis planning must happen early.

How is a California single-member LLC taxed?

By default, it is disregarded for federal tax purposes and reported on Schedule C. California still imposes the $800 minimum franchise tax. The LLC alone does not create tax savings. Tax outcomes depend on income level and elections.

When should a California SMLLC elect S-Corporation status?

When net income is high enough to justify payroll and reasonable compensation. Payroll tax savings must exceed compliance cost and audit risk. Low or inconsistent income rarely qualifies. This decision should be modeled before electing.

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