Welcome Guest. Register Now!  



Reply
 
LinkBack Thread Tools Search this Thread Display Modes
  #1 (permalink)  
Old 10-04-2013, 07:34 PM
Junior Member
 
Join Date: Jan 2012
Posts: 4
sole proprieter , needs to change llc status

My business is listed as a LLC , however it is truly a sole proprieter ship and has been for 3 years now. I don't have any partners or share holders at all. What do I need to do to change the LLC status? Is changing the LLC status beneficial to me? meaning how does this change how I pay my taxes exactly?



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
  #2 (permalink)  
Old 10-06-2013, 08:11 AM
Moderator
 
Join Date: Oct 2010
Posts: 5,233
Quote:
Originally Posted by Janese909 View Post


#1;My business is listed as a LLC , however it is truly a sole proprieter ship and has been for 3 years now. I don't have any partners or share holders at all. What do I need to do to change the LLC status?



#2;Is changing the LLC status beneficial to me? meaning how does this change how I pay my taxes exactly?
#1;Your biz is actually SMLLC, As a SMLLC, the IRS by default treats your LLC as a disregarded entity, meaning that you don't have to file a separate informational tax return for the LLC. Instead, all of your revenues and expenses are recorded on your Sch C on your personal 1040 return;assume that you want to convert the SMLLC to MMLLC, then, you do not need to apply for a new EIN#. The year you add a partner, you need to file a partnership tax return, from 1065. Individual partners would receive a K-1 for their share of income or losses to be reported on that owner's tax return. LLC's are flexible entities for bringing in and removing members. Check with your state to see if there are any formal filings with the secretary of state that need to be done, typically the I would advise a very strongly written operating agreement document re aren't. There isn't any requirement for minimum percentage either.
NOTE: when you convert from a sole proprietor to a partnership, MMLLC, I mean, then, you do have to get a new EIN #. However, you are not converting to a "partnership", the SMLLC remains the same entity, the "LLC" regardless of how many members are involved.

#2; As mentioned above, it depends on the situation.; you may convert your SMLLC to an S corp / A C corp/ a MMLLC or etc. One of the most important decisions that business owners make is selecting their ownership structure. When determining what type of entity will fit your business best—LLC, partnership, S corp, or C corp—consider such factors as raising capital, control, legal liability, and tax benefits. Also,you need to establish a back-up plan because once you have made your decision regarding which entity to choose, changes in ownership, tax law, or the economy may make it necessary to convert to an entirely new type of entity. Having legal protection within your new entity is a necessity and can make a business more attractive for investors as most require some form of legal liability protection. S corps, C corps, limited partnerships, and LLCs are popular because they have limited personal liability for debts and other actions undertaken against the entity. Tax benefits should not be overlooked or underestimated when converting yoru LLC to a new business since each entity type has tax opportunities as well as consequences.. S corps, partnerships, and LLCs taxed as partnerships are pass-through entities, which mean they "pass through" taxable income, interest, dividends, deductions, and credits to the shareholders or partners responsible for paying tax. This avoids the double taxation associated with C corps that pay entity-level taxes and then distribute dividends that are subject to individual taxes.



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
Ads
Reply


Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

vB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Moved but didn't change W4 DevDavid Income 1 03-06-2013 04:18 AM
Dual Status Foreing Student/Intern on J1 visa - Status lenght calculations questions EdMarchand Income 0 02-15-2012 08:09 PM
change of address for s-corp scorpguy S-Corporation 0 06-21-2009 03:13 AM
NJ LLC how to change the members. newbie Limited Liability Company 0 12-10-2008 08:47 PM
Changed from sole proprieter to LLC SBee Limited Liability Company 1 03-20-2008 03:54 PM

Follow us on Facebook Follow us on Twitter Google Buzz Rss Feeds

» Categories
 
Individual
 » Income
 » IRA/Sep
 » Medical
 
Corporations
 » Payroll
 
Forum for CPAs
 
Financial Planning