Under the laws of which state is Kidokinetics structured as a limited liability company?
Kidokinetics Franchise · 2024 FDDAnswer from 2024 FDD Document
The Company is structured as a limited liability company under the laws of the state of Florida. Accordingly, the income or loss of the Company will be included in the income tax returns of the members. Therefore, there is no provision for federal and state income taxes.
The Company follows the guidance under ASC 740, Accounting for Uncertainty in Income Taxes. ASC 740 prescribes a more-likely-than-not measurement methodology to reflect the financial statement impact of uncertain tax positions taken or expected to be taken in the tax return. If taxing authorities were to disallow any tax positions taken by the Company, the additional income taxes, if any, would be imposed on the member rather than the Company. Accordingly, there would be no effect on the Company's financial statements.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 59)
What This Means (2024 FDD)
According to Kidokinetics's 2024 Franchise Disclosure Document, Kidokinetics Franchise LLC is structured as a limited liability company under the laws of the state of Florida. This means that the company was formed and operates according to Florida's regulations for LLCs. This structure affects how the company's income and losses are handled for tax purposes.
Specifically, the FDD states that because Kidokinetics is an LLC in Florida, its income or loss will be included in the income tax returns of its members, rather than being taxed at the company level. Therefore, Kidokinetics itself does not have a provision for federal and state income taxes. This is a common characteristic of LLCs, often referred to as pass-through taxation.
This structure has implications for potential franchisees. It means that Kidokinetics's financial performance directly impacts the tax obligations of its members. However, the FDD also notes that if taxing authorities were to disallow any tax positions taken by Kidokinetics, the additional income taxes would be imposed on the members, not the company itself, and would not affect the company's financial statements. This clarifies that while the members bear the tax burden, the company's financial statements remain unaffected by individual member tax issues.