Llc Bank Account Necessity

Summary

Each subsidiary LLC should ideally have its own bank account for financial clarity and liability protection, though its not legally required. LLCs can be taxed as sole proprietorships, partnerships, or corporations, affecting how profits are reported and taxed. Consider consulting a local attorney or accountant for personalized advice on setting up and managing your LLCs.

Full Conversation

Looking to create an LLC. When creating a holding LLC, I know you need a bank account. When you create subsidiary LLC’s, do you need a bank account for those?
Hi ****! Generally, it's recommended for each subsidiary LLC to have its own bank account for clear financial separation and easier bookkeeping. However, it's not legally required. It helps in maintaining limited liability protection and simplifying tax reporting.
Is there anything else you'd like to know about setting up your LLCs?
How do taxes work for an LLC
LLC taxes can vary based on the chosen tax classification. Here are the main options:
- Sole Proprietorship: Single-member LLCs are taxed as sole proprietorships. Income is reported on the owner's personal tax return.
- Partnership: Multi-member LLCs default to partnership taxation. Each member reports their share of profits/losses on their personal tax return.
- Corporation: LLCs can elect to be taxed as a corporation, either as a C-Corp or S-Corp. This affects how profits are taxed and reported.
Would you like more details on any specific tax classification?