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Frank Is a friend of mine that is concerned with whether or not he should attempt to minimize the tax burden. To better assist Frank, he needs to understand the concepts of limited liability or liability protection. Limited Liability Companies (LLC’s) offer the tax advantages of a corporation and also the tax status of a partnerships (Langdvardt, Barnes, Preknert, McCroy, and Perry, 2019). Limited liability companies use pass though taxation. Pass through taxation states “The pass-through taxation works as though the profits and losses of the LLC pass directly through to the owners of the LLC. Unlike a corporation, an LLC is not a separate tax entity, meaning that the owners pay the taxes for the LLC” (FindLaw, 2021). Being part of an LLC allows the business to pay taxes but not be subjected to double taxes for both the owner and the company. Understanding how LLCs work will help Frank to make the correct decision
From a Christian perspective, it would not be wrong from him to use an LLC to provide for liability protection. The profits of the LLC are not considered taxable but the hares of bottom-line profit are considered taxable (Griffin, 2021). As long as he pays what the law says he owes, he would not be going against the teachings in the bible. Romans 13:6-7 states “For because of this you also pay taxes, for the authorities are ministers of God, attending to this very thing. 7 Pay to all what is owed to them: taxes to whom taxes are owed, revenue to whom revenue is owed, respect to whom respect is owed, honor to whom honor is owed” (Romans 13:6-7, NLT). He would need to Understand the rules and guidelines put in place for LLCs. The Internal Revenue Service (IRS) has put in guidelines for knowing the amount and type of taxes for LLCs. According to their website, two or more members of a LLC is classified as a partnership, and LLCs with only one member are classified as an entity separate from the owner (Internal Revenue Service, 2021).
From the Christian worldview, it is not wrong to want to minimize the tax burden. This is true as long as the business pays what the law says is owed. It would be best for him to ensure that he talks with an accountant or tax professional to find out exactly what he would need to do to ensure this. Another recommendation from me would be to pray about it and see Guidance form the almighty savior. The bible gives guidance for us to follow. That would be a good tool that Frank could use in determining whether or not it is wrong from him to try and ease his tax burden. The bible tells us that we do not want to leave anyone owing money. Romans 13: 8 states “Owe no one anything, except to love each other, for the one who loves another has fulfilled the law” (Romans 13: 8, NLT). Frank would want to pay what he owes but based on the bible’s teachings, he should not have to pay more.