Most Pennsylvania-based businesses can be organized as limited liability companies. Such a company could have as little as one member. In this scenario, the company would automatically be taxed as a disregarded entity. This would mean that the profits and losses that the business incurs would go directly to the owner’s personal tax return. If the LLC has two members, it will be taxed as a partnership by default.
However, LLCs can decide to be taxed as a corporation by filing Form 8832. Such a designation cannot take effect more than 75 days before it is made or more than 12 months after it has been made. Companies that do not make an election to change their tax status in a timely manner might be entitled to relief from the IRS.
As a general rule, an LLC can have as many members as it wants, and those members don’t have to be individuals. Corporate entities and other LLCs can generally have an ownership stake in such a business. Furthermore, both domestic and foreign entities can have an ownership stake in a limited liability entity. It is worth noting that banks, insurance companies and some other types of businesses are not eligible for LLC status.
Those who are looking to start a limited liability company may want to consult with an attorney during the business formation process. An attorney could help draft partnership agreements, file tax forms or take care of regulatory compliance issues that may arise. Addressing these and other issues could prevent a company’s members from facing civil or criminal charges. It may also prevent a company from being shut down either temporarily or on a permanent basis.