Adding a member to an LLC is straightforward, but there are slightly different considerations when you add a new member to a single-member LLC. You will not need to re-register your LLC with the state, but you may have to file an amended Articles of Organization.
Though not required, you should also amend your Operating Agreement to clarify the relationship you have with your new partner. Due to the flexibility of the LLC structure, your new partner may invest any amount of time or money into the LLC and receive any share of the LLC you two deem agreeable.
In an employer-employee relationship, half of Social Security and Medicare taxes are paid by the employer. When you are self-employed, you must pay the full Social Security and Medicare taxes on your own. This additional share is referred to as the self-employment tax. The self-employment tax rate is subject to change, but is currently 15.3%, which consists of 12.4% Social Security tax and 2.9% Medicare tax. For the 2011 tax year, the self-employment tax rate will change to 13.3%, which consists of 10.4% Social Security tax and 2.9% Medicare tax.
Business write-offs can help your LLC save a lot of money in income tax. Remember that write-offs are deductions rather than credits; they allow you to reduce the amount income you must pay taxes on, which results in an indirect savings in tax payments. The amount you save from a write-off depends on your tax bracket.
An Employer Identification Number, or EIN, is a unique tax id number assigned to businesses so that the IRS may keep track of them. In this way, the EIN is very similar to your Social Security Number. If an LLC has more than one owner — or “member” — it must apply for an EIN. Additionally, if the LLC has any employees other than the single owner, it must apply for an EIN.
Planning for business losses is rarely at the top of the todo list for LLC founders. However, recognizing and planning for potential negative revenue will help to keep your business stable. This is why it is so vital to create not just a profit-sharing provision in your operating agreement, but also a loss-sharing provision.