{"id":71943,"date":"2016-12-14T12:42:25","date_gmt":"2016-12-14T17:42:25","guid":{"rendered":"https:\/\/www.chcfinc.org\/clearinghouse\/?page_id=71943"},"modified":"2017-09-24T12:15:55","modified_gmt":"2017-09-24T16:15:55","slug":"limited-liability-company-llc","status":"publish","type":"page","link":"https:\/\/www.chcfinc.org\/clearinghouse\/establish-your-program\/limited-liability-company-llc\/","title":{"rendered":"Limited Liability Company (LLC)"},"content":{"rendered":"

[vc_row type=”container” padding_top=”” padding_bottom=””][vc_column css=”.vc_custom_1444995043702{margin-bottom: 35px !important;}”][vc_column_text]Since LLC members (owners) are not employees, contributions to the Social Security and Medicare systems are not withheld from their paychecks. Instead, most LLC owners are required to pay \u201c<\/span>self-employment taxes<\/span><\/a>\u201d directly to the IRS.<\/span><\/p>\n

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The current rule is that any owner who works in or helps manage a business must pay self-employment taxes on his\/her share. However, owners who are not active in the LLC \u2014 that is, those who have merely invested money but don\u2019t provide services or make management decisions for the LLC \u2014 may be exempt from paying self-employment taxes on their share of profits.<\/span><\/p>\n

Each owner who is subject to the self-employment tax, reports the amount due on Schedule SE (Form 1040), which must be submitted annually with their tax return. LLC owners (and sole proprietors and partners) pay twice as much\u00a0<\/span>self-employment tax\u00a0<\/span><\/a>as regular employees because regular employees\u2019 contributions to the self-employment tax are matched by their employers. However, LLC owners also get to deduct half of the total amount from their taxable income, line 27 of Form 1040.<\/span>[\/vc_column_text][\/vc_column][\/vc_row][vc_row type=”container” padding_top=”” padding_bottom=””][vc_column][vc_tta_accordion active_section=”0″ collapsible_all=”true”][vc_tta_section title=”Forming an LLC in New York State” tab_id=”1449262529385-c6a87a1a-c9d3″][vc_column_text]Generally, LLC members (owners) do not have any personal liability for the obligations of the entity. There are instances where members (owners) may be held personally liable by the court for the actions of the LLC. This is known as \u201cpiercing the corporate veil.\u201d<\/span><\/p>\n

As a home-based business, family child care service providers may be particularly challenged to demonstrate that the business is separate and apart from the owner (member.) Consequently, they are more likely to have their corporate veil pierced.<\/span><\/p>\n

The most effective way a family childcare service provider can protect him.herself is by obtaining proper insurance coverage.<\/span>\u00a0<\/span>See here for further information.<\/span><\/a><\/p>\n

Establishing an LLC:<\/b><\/h3>\n