LLC Entity Classification What is It and How to Get It? NS

LLC entity classification and how do you get it?  An LLC is short for limited liability company.  Some people think and LLC entity classification  is short for limited liability corporation, but that’s not right.  An LLC does offer the same corporate shield protection that a corporation has, but it also offers another type of asset protection called “charging order” protection.

When you file an LLC entity classification you can choose to elect how your new business will be classified for tax purposes.  If your LLC has two or more members you can choose to be classified as either a corporation or a partnership.  If you are the only member of your LLC you can choose your LLC entity classification to be classified as a corporation or sole proprietorship. This is how you pick what entity you are.

Once you pick your LLC entity classification, you must file Form 8832 to elect your LLC’s classification.  If you do not file the form, your LLC will be classified, under the IRS default rules. The default rules provide that if your LLC has two or more members it will automatically default to a partnership. If you are the only member of your LLC it will automatically default to the classification of disregarded entity. The disregarded entity files as a sole proprietorship tax form.