Deductible Expenses & Savings

Similar to a corporation, normal business expenses like your salary may be deducted from the profits of your LLC before the income is allocated to your owners (also called 'members').

Your LLC is not considered a separate tax entity from its owners for tax purposes — whereas a corporation is considered separate for tax purposes.

This means that business income passes through the business to your LLC members, who report their share of profits/losses on the individual tax returns. An LLC with more than one member is automatically classified as a partnership for tax purposes.

LLCs can also offer an additional tax advantage over a corporation because the allocation of earnings among owners is flexible. The owners of an LLC can agree to allocate the company's profits and losses among themselves however they see fit, and not necessarily based on what percentage of the company each owner controls.