I looking to start my own LLC and I was wondering what the tax advantages and tax disadvantages are to being an llc?
The main advantages of the LLC over the corporation are:
1. Pass-through taxation which lets you take a personal tax deduction for the (usual) early losses incurred by a startup.
2. Only a single level of taxation, instead of the corporation’s double tax of corporate income tax + tax on dividends.
Now that a new administration is taxing place, it is likely that the low dividend tax rate of 15% will expire (it was part of the Bush tax cuts), and dividends will be taxed at the highest income tax rates. That would mean a 35% corporate tax + up to a 39.6% dividend if Obama returns rates to pre-Bush (Clinton-era) tax rates.