After formulating a business idea, the next most important step is deciding which business structure that you use. The entity you choose will have tax implications, as well as affect how you operate the company. To make an informed decision, you need to have all your questions answered about each type. If you are considering forming an LLC, you may be wondering how many people are required to be eligible for this setup. The simple answer is that there is no minimum number.
People Needed for an LLC
You can make your business an LLC with just you as the owner. However, you have to be careful in your management to ensure your company does not act as a sole proprietorship instead. Therefore, it may be beneficial to include other owners. These members do not have to be people, though. They can also be businesses, trusts, IRAs, and other legal entities.
There is no maximum number of members either, unless your LLC is taxed as an S-Corporation. In that case, only 100 shareholders are allowed, and owners cannot be certain types of businesses.
Taxes With an LLC
Part of LLC paperwork is determining how you want the government to tax your business. No LLC tax category exists, so choose a tax structure of one of the other types of entities based on the advantages and disadvantages of each.
If you do not decide, the government will base your tax obligations on how many owners you have. For one, taxes will be like that of a sole proprietorship. For more than one, taxes will be like that of a partnership. Both these methods do not treat the LLC as a separate entity for income tax purposes.
Part of the process of establishing your company includes getting a tax ID number for the business. You can find an online tax ID application right here at GovDocFiling. Fill out this EIN form to get started.