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Elgin business formation attorney LLCIn mid-2017, a 112-page bill from the Illinois General Assembly significantly altered the Illinois Limited Liability Company Act. Its purpose was to align Illinois law with the Revised Uniform Limited Liability Company Act adhered to in most states. In addition to affecting the formation of future companies, the law also applied to LLCs already in existence. Changes that significantly impacted Illinois business entities and individuals starting a new company include:

Clarification of Procedures for Records Inspection and Copying

If an LLC member wishes to assess the business’ transactions and financial status, the company must provide the necessary records within 10 days of the request, unless it is understood the individual already knows the information contained therein. Disassociated members also maintain these rights, and any denial of access must be made in writing by the company.

Verbal and Inferred Agreements Now Accepted 

While this reverses the previous standard regarding oral and implied operating agreements, a written operating contract is still the preferred method. In some situations, a court may decide there is no proof of an oral agreement, but persons who neglected to draft a written agreement now have an avenue to assert their rights.

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Elgin business law attorney LLC tax reformThe Tax Cuts and Jobs Act of 2017, which was passed by Congress and signed into law by President Trump last December, made a wide variety of sweeping changes to the United States Tax Code. In addition to reducing the corporate tax rate, the tax reform law implemented some changes which can benefit small business owners, and people should be aware of how they can take advantage of these changes and minimize their tax burden by establishing themselves as a LLC.

Pass-Through Entities and LLCs

One significant change that the Tax Cuts and Jobs Act made was in how pass-through entities are treated. With pass-through businesses, such as sole proprietorships or LLCs, profits are taxed at the owner’s individual tax rate rather than the corporate tax rate. Under the tax reform law, owners of pass-through entities can now deduct 20% of their qualified business income. 

The pass-through deduction is a “below the line” deduction which is taken from a taxpayer’s adjusted gross income (AGI). This means that it will apply to a person’s taxable income after other deductions have been made, such as retirement plan contributions, health insurance premiums, alimony, and interest on student loans.

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