IRS & LLC’s: Importance to Businesses (Coursework Sample)

IRS & LLC’s
Student’s First Name, Middle Name, Last Name
Institution Affiliation
Course Code and Number
Instructor’s Name
Assignment Due Date
IRS & LLC’s
Limited Liability companies (LLC) offer limited liability to personal assets of the owner and are considered to be best for small businesses (Haskins, 2020). Apart from limited personal liabilities, the owners of LLC’s are entitled to tax advantages. LLC’s have been predicted by the experts to replace corporations and partnerships for small businesses due to the regulations introduced by Internal Revenue Services that are discussed below, together with a court case and decision involving an LLC.
Depending on the number of owners, the LLC has been classified and taxed as either a sole proprietorship or a partnership by the Internal Revenue Services (IRS). LLC’s have the pass through taxation advantage and can decide whether they want to be taxed as corporation (Haskins, 2020). In addition, in case of a litigation, the owners’ personal assets are not at risk of being seized which is known as limited personal liability. LLCs are formed in the state and must therefore follow the state’s IRS regulation they reside in even if the federal rules are different ("LLC Regulations: Everything You Need to Know", n.d.). The owners also have the ability to decide how they are going to distribute the business profits unlike corporations that issues dividends. These IRS regulations give LLC an advantage.
A case was taken to court whereby the plaintiff who was a sole owner of LLC failed to file Form 8832 that led to the LLC to be disregarded as separate entity from the taxpayer (McEowen, 2011). The taxpayer did not pay the payroll taxes. The court ruled that the owner was personally responsible for the unpaid payroll taxes as the owner failed to make an election on corporate tax treatment that involves choosing whether to be taxed as a corporation or not.
In my opinion, I do agree with the