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West Virginia LLC
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Advantages of Limited Liability Company
- 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 Limited Liability Company
- 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 West Virginia 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 West Virginia LLC members, the name and address of your West Virginia registered agent, the details of which will be introduced into the body of your LLC operating agreement and related West Virginia LLC formation documents assembled for application to the state of West Virginia.
West Virginia’s Business Tax Climate Ranks 47th
West Virginia ranks 47th in the State Business Tax Climate Index, which measures the impact on business of five major elements of the tax system: the percentage of income taken by all taxes, the individual income tax rates, the corporate income taxes, the sales tax rate, and the complexity of the tax system. Neighboring states ranked as follows: Pennsylvania (22nd), Ohio (29th), Virginia (12th) and Kentucky (44th).West Virginia’s State/Local Tax Burden is Higher than the National Average
In 1990 West Virginia had a slightly below-average tax burden (10.0% compared to a national average of 10.3%). Since then, tax collections have risen substantially, faster than income in most of the past 14 years. Estimated now at 10.6% of income (the 8th highest in the nation), West Virginia’s state/local taxes are higher than the national average of 10.0%.
West Virginia Top Individual Income Tax Rate Fairly High
West Virginia’s income tax system is composed of five brackets with a top rate of 6.5% kicking in at an income level of $60,000. West Virginia's 2002 individual income tax collections were $573 per person (31st highest nationally).
Since most small businesses are either S Corporations or partnerships or sole proprietorships, they pay their business taxes at the rates for individuals. This makes West Virginia's taxes on small businesses fairly high compared to most other states.
West Virginia’s Corporate Income Tax Rate is Among the Highest in the Nation
West Virginia’s corporate tax structure consists simply of a flat 9% rate on all corporate income. West Virginia also imposes a "Business Franchise Tax" of $0.70 per $100 of taxable capital, or a minimum of $50. This tax ranks the state in a tie for 9th in terms of highest corporate tax rate. Despite the high rates, West Virginia’s corporate income tax collections are among the lower 50% of states. In 2000, corporate tax collections in West Virginia totaled $120.44 per capita.
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