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| *The Commerce Journal>>>United States Taxes |
With a LLC should you make efforts to reinvest your profits at the end of the year? |
To avoid having to pay taxes on what is in your savings and checking account? To rephrase the above answers slightly, you never pay tax on what you have in the bank. You pay tax based on the accounting profit or loss sustained by the LLC. An LLC is a disregarded entity. The owners of an LLC have to pay a tax on the income whether or not that income is withdrawn or left in the company. You should reinvest earnings if it is the correct business decision regardless of the tax consequences. If the LLC can benefit from the investment, e.g. by investing in more equipment, getting more clients, or growing, then it is wise to make the investment. |
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