Washington LLC Advantages and Disadvantages
An Washington LLC
offers business entrepreneurs the form of corporate organization that provides perhaps the most flexibility to you. An LLC formation, like the alternative corporate forms of organization like a limited partnership
or a Subchapter S Corporation,
are generally prime candidates for a business juststarting. The state of Washington gives public support to an Washington LLC.
Should I form a Washington LLC?
An Washington LLC satisfies a necessary condition of your business planning developement in that it meets the requirement that you establish a legal form of organization in order to gain the statutory benefits and protection available in Washington to your LLC. Your Washington LLC establishes a legal presence within the state, which you can use either as a platform for in-state operations or by registering your Washington LLC via your agent's physical address in order to meet the purely statutory requirement for tax and filing purposes absent an in state operation.
Advantages and Disadvantages of a Washington LLC
Advantages of LLC
- Limited Liability: Owners of a LLC have the limited liability protection of a corporation.
- Flexible Profit Distribution: Limited liability companies can select varying forms of distribution of profits. Unlike a common partnership where the split is 50-50, LLC have much more flexibility.
- No Minutes: Corporations are required to keep formal minutes, have meetings, and record resolutions. The LLC business structure requires no corporate minutes or resolutions and is easier to operate.
- Flow Through Taxation: All your business losses, profits, and expenses flow through the company to the individual members. You avoid the double taxation of paying corporate tax and individual tax. Usually, this will be a tax advantage, but circumstances can favor a corporate tax structure.
Disadvantages of LLC
- Limited Life: Corporations can live forever, whereas a LLC is dissolved when a member dies or undergoes bankruptcy.
- Going Public: Business owners with plans to take their company public, or issuing employee shares in the future, may be best served by choosing a corporate business structure.
- Added Complexity: Running a sole-proprietorship or partnership will have less paperwork and complexity. A LLC may federally be classified as a sole-proprietorship, partnership, or corporation for tax purposes. Classification can be selected or a default may apply.
By Washington and other state law in order to proceed with forming a llc, you need to prepare a written abstract detailing your llc purpose, the names of your initial Washington LLC members, the name and address of your Washington registered agent, the details of which will be introduced into the body of your LLC operating agreement and related Washington LLC formation documents assembled for application to the state of Washington.
Washington's 2012 Business Tax Climate Ranks 7th
Washington ranks 7th in the Tax State Business Tax Climate Index. The Index compares the states in five areas of taxation that impact business: corporate taxes; individual income taxes; sales taxes; unemployment insurance taxes; and taxes on property, including residential and commercial property.
Tax Freedom Day Arrives on April 16 in Washington
Tax Freedom Day is the day when Americans finally have earned enough money to pay off their total tax bill for the year. In 2011, Washington taxpayers work until April 16 to pay their total tax bill, ranking it 5th highest in the nation. This is 4 days after national Tax Freedom Day (April 12).
Washington's State and Local Tax Burden Below National Average
Washington's state and local tax burden is currently estimated at 9.3% of income (29th nationally), below the national average of 9.8%. Compared to the 1977 data, Washington had a tax burden of 9.6% (31st nationally), decreasing 0.3% overall. Currently Washington taxpayers pay $4,408 per capita in state and local taxes.
Washington Levies No Individual Income Taxes Washington levies no state personal income taxes, joining Alaska, Florida, Nevada, South Dakota, Texas and Wyoming as the only other states not to do so.
Levies Nation's Oldest Gross Receipts TaxWashington's corporate tax structure contains no corporate income tax. Nevada, Texas and Wyoming are the only other states that do not levy corporate income taxes. However, Washington levies the nation's oldest gross receipts tax, the Business and Occupations (B&O) Tax, first instituted in 1933. Washington, Texas, Ohio, Michigan and Delaware are the only states to levy economy-wide gross receipts taxes.
Washington Sales and Excise Taxes Washington levies a 6.5% general sales or use tax on consumers, above the national median of 5.85%. In 2007 combined state and local general and selective sales tax collections were $2,661 per person, which ranks 2nd highest in the nation. Washington's gasoline tax stands at 37.5 cents per gallon, which ranks 3rd highest nationally. Washington's cigarette tax stands at $2.025 per pack of twenty and ranks 9th highest nationally. The sales tax was adopted in 1933, the gasoline tax in 1921 and the cigarette tax in 1935.
Washington Property TaxesWashington is one of the 37 states that collect property taxes at both the state and local levels. As in most states, local governments collect the majority of property taxes. Washington's localities collected $835.25 per capita in property taxes in fiscal year 2006, which is the latest year the Census Bureau published state-by-state property tax collections. At the state level, Washington collects more property taxes than most states do. In FY 2006, Washington collected $257.73 per capita, bringing its combined state/local property taxes to $1,092.98 per capita, which ranks 25th highest nationally.
Federal Tax Burdens and Expenditures: Washington is a Donor StateWashington taxpayers receive less federal funding per dollar of federal taxes paid than the average state. Per dollar of Federal tax collected in 2005, Washington citizens received approximately $0.88 in the way of federal spending. This ranks the state 38th highest nationally and represents a decline from 1995, when Washington received $0.97 per dollar of taxes in federal spending (ranked 31st nationally).
Reference - Tax Foundation
Home | Washington LLC Advantages and Disadvantages | Site-Map