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Income Tax for an LLC

Limited Liability Companies (LLCs) operate under a unique tax structure with a personal touch. In the realm of LLCs, the responsibility for taxes lies with the individual partner who owns the company.

The taxation process involves applying different percentages, ranging from 10% to 37%, on the global profit generated by the LLC. This taxation model provides flexibility, aligning the tax burden with the individual partners' financial interests.

However, there are important considerations for foreign partners. To fulfill personal tax declarations, foreign partners must obtain an Individual Taxpayer Identification Number (ITIN) beforehand.

In the case of LLCs with two or more members, the entity is taxed as an LLC partnership. For foreign partners in this scenario, a 37% retention is applied to their share of the global profit. It's worth noting that this withholding can be later deducted in the personal tax return. In the event of a credit balance, the IRS will issue a refund check for the withheld amount.

For detailed insights into the structural and tax intricacies of an LLC, including how income tax impacts this business entity, refer to additional information here.