LLC and taxes

When it comes to taxes, most states follow the federal guidelines and allow LLCs members to file earnings on their individual(s) tax earnings so the LLC doesn’t directly pay income taxes. But, there might be instances where your business is subject to additional state income, sales, franchise or employer taxes. A trusted CPA, tax professional or your Secretary of State can help you navigate these waters.

If each state had very different business entity laws, life could quickly get very complicated for interstate business. For that reason, uniform statutes have been developed by the Uniform Law Commission. A substantial majority of states have adopted (typically with some minor adjustments) various uniform acts, such as the Uniform Partnership Act and the Uniform Limited Partnership Act. I used laws of  kentucky llc during register my company, 

Profits and losses must be distributed to the shareholders in proportion to the shareholder's interest. For example, you can't have disproportionate distributions of dividends or losses. If a shareholder owns 10 percent of the S corp, he or she must receive 10 percent of the profits or losses.

The downside is, sole proprietors are not legally separate from their businesses, so they are liable for all of their business’s obligations. That means a sole proprietor’s bank accounts, house, and cars are at risk in a lawsuit against the business.