It’s crucial to comprehend your LLC’s tax responsibilities in addition to choosing the appropriate NAICS number for your company. Because they provide personal liability protection for their owners while also allowing for taxation flexibility, limited liability companies (LLCs) are a common corporate form.
Although LLCs are not subject to federal taxation, they may nevertheless be required to pay state and local taxes. Furthermore, LLCs must pay self-employment taxes on the revenue they bring in. These taxes are based on the net profits of the LLC and are paid quarterly.
LLCs can benefit from a number of deductions and credits to reduce their tax obligations. For instance, they may write off costs related to their firm, such as rent, utilities, and supplies. LLCs are also eligible for the Qualified Business Income deduction, which entitles them to a 20% reduction in their taxable income for qualifying business income.
The personal liability protection an LLC provides is one of its key advantages. This protects the owners from any litigation or obligations that the company incurs by keeping their personal assets distinct from the assets of the company. Additionally, LLCs provide freedom in management and taxation, which attracts small business owners as a viable option.
You can create an LLC even if you don’t run a business or make money from it. A “holding” or “shell” corporation, such as this one, is frequently used to hold investments or assets. It is crucial to remember that even if the LLC is not making money, it could still be required to pay annual fees and fulfill other formalities.
In conclusion, the NAICS number for your company is 453110 if you intend to sell hair extensions in the US. You must pay self-employment taxes on your net income as an LLC, and you can also be responsible for state and local taxes. To lessen your tax liability, there are a number of deductions and credits available. Personal liability protection, as well as management and tax flexibility, are advantages of creating an LLC. Last but not least, it is possible to create an LLC without a company, but there may still be fees and administrative procedures.