A DBA is a legal designation that enables a business to operate under a name other than that of the owner. It’s sometimes referred to as a “assumed name” or a “fictitious name.” In order to run his bakery under the name “Sweet Treats,” for instance, John Smith would need to submit a DBA application. As a result, he can conduct business using the chosen name without having to establish a new legal corporation.
While a DBA is a practical choice for partnerships and sole proprietorships, it does not shield the owner’s personal assets from company responsibilities. at other words, John Smith’s personal assets are at jeopardy if Sweet Treats is sued. A DBA does not offer tax advantages, and the owner is still liable for paying self-employment taxes. LLC: What is that?
A sort of legal entity called an LLC offers its owner(s) limited liability protection. This means that any liabilities incurred by the firm do not affect the owner’s personal assets. For instance, if John Smith is sued on behalf of Sweet Treats, the lawsuit cannot be used to seize his personal assets, which include his home and vehicle.
A LLC also offers tax advantages. The owner(s) has the option of being taxed as a C-corporation, S-corporation, partnership, or sole proprietorship. This enables tax planning options for the company and may result in tax savings for the owner(s).
A person or corporation authorised to receive legal documents on behalf of the company is known as a registered agent. Even while a registered agent can also be the owner, it is not advised. Having the registered agent’s address published as the business address may jeopardize the owner’s security and privacy because it is public information.
The person or organization in charge of drafting and submitting the Articles of Organization to the state is known as the organizer of an LLC. Usually, this will be the owner(s) or a lawyer. The LLC’s owner(s) need not necessarily be the organizer. How do I use my LLC to pay myself?
You have a few options for paying yourself as the proprietor of an LLC. The most typical method is to withdraw money from the company’s profits. Although it is comparable to a salary, this is exempt from payroll taxes. Paying yourself a salary and deducting payroll taxes is an additional choice. The business profits might also be distributed to you without being taxed as self-employment income.
Depending on how the business is taxed, the tax rate for an LLC varies. The owner(s) will be responsible for paying self-employment taxes on the business profits if the LLC is taxed as a sole proprietorship or partnership. The business will pay corporate taxes on the profits if the LLC is taxed as an S-corporation or C-corporation, and the owner(s) will pay individual income taxes on any distributions they get. Conclusion: Although DBAs and LLCs both have advantages, they are very distinct legal entities. DBAs are typically used by partnerships and sole owners that desire to conduct business under a different name, whereas LLCs offer limited liability protection and tax advantages. A lawyer or accountant should be consulted when forming a business to determine the optimal structure for your unique requirements.
Yes, an LLC (Limited Liability Company) is normally privately held, meaning that its stock is not traded publicly. It is a sort of corporate structure that combines the advantages of partnerships and corporations by giving owners limited liability protection, flexible management options, and tax advantages.