LLCs are typically taxed like sole proprietorships or general partnerships on what is called “pass-through” taxation. This means the owners’ personal tax returns will reflect the profit and loss of the company, that those profits are “passed through” to the individual. Alternatively, LLCs may elect to be taxed as S corporations to potentially reduce the self-employment taxes imposed on the owners. To address your tax issues, check with an attorney or certified public accountant.

It should also be noted that several states impose an annual renewal fee, ranging from $10 to $800, on LLCs. These “taxes” must be paid in order to keep your business in compliance with the state. Your ability to conduct business may be dependent on these fees, so be sure to have your state or service contact you for due dates and deadlines.