Friday, August 19, 2011

LLC tax fear?

I hope i can communicate my question. I remember reading somewhere that an LLC is considered a 'p-through' entity with regard to taxation, or words to that effect. I am worried that if I start a LLC, (and be a shareholder) , that it could grow quickly and then I would be liable for taxes because the company's taxable income would p through to the shareholders. I would not have another source of cash to pay taxes except what I get from this LLC in the form of income. If I draw zero income, but own alot of shares, could i be in a position where I have to pay taxes out of money I don't have? Would I essentially be forced to sell off some shares just so that I could pay taxes?

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