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Old 02-17-2014, 11:43 AM
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Join Date: Feb 2014
Posts: 2
Josh

My Father Transferred His Ownership In A Single Member LLC To Me During 2013. About One Month Later, Another Party Joined Me.
We Are Now Preparing To File Our Tax Returns. I Have Been Advised By Two Different People That We Will Need To File As A
Partnership Or Corporation Since There Are Two Members.

Also, Will Need To Do The Following:

File An Entity Classification Form And Request A New FEIN.

Questions Are As Follows:

Is This Advice Correct Or Can We File A Schedule C?

Since We Used The Tax Id Number Of The Original Single Member Llc During 2013 To Report All Employment Taxes, W-2's, Etc. ,will
All Of Those Reports Have To Be Changed Using New Number?

Last, Any Other Actions I Haven't Considered?

Thanks.



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Old 02-18-2014, 12:43 AM
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Quote:
Originally Posted by JOSH View Post

#1;My Father Transferred His Ownership In A Single Member LLC
To Me During 2013. About One Month Later, Another Party Joined Me.
We Are Now Preparing To File Our Tax Returns. I Have Been Advised By Two Different People That We Will Need To File As A
Partnership Or Corporation Since There Are Two Members.

#2;Also, Will Need To Do The Following:

File An Entity Classification Form And Request A New FEIN.

#3;Questions Are As Follows:

Is This Advice Correct Or Can We File A Schedule C?

#4;Since We Used The Tax Id Number Of The Original Single Member Llc During 2013 To Report All Employment Taxes, W-2's, Etc. ,will



#5;All Of Those Reports Have To Be Changed Using New Number?

#6;Last, Any Other Actions I Haven't Considered?

Thanks.
#1;Correct;it is now a MMLLC that can be taxed as a S-Corp/ C Corp.Your MMLLC is a partnership by default until you elect S-Corp/ C Corp. status


#2;Yes; since you switched from a SMLLC to a partnership, MMLLC UNLESS the mmllc is taxed as S- or C –Corp. It would require a new FEIN. The same applies if switching from the smllc to an S- or C –Corp.

#3;No;unless it is a SMLLC, disregarded entity, you , as a MMLLC, need to file from 1065 as a partnership/ or 1120S as an S corp/ a 1120 as a C corp.

#4;as a partnership, your mmlc filing as general partnerships can also take advantage of pass-through taxation. Flow-through taxation means that the entity does not pay taxes on its income. Instead, the owners of the entity pay tax on their "distributive share" of the entity's taxable income, even if no funds are distributed by the partnership to the ownersThe amount each you can claim is outlined in the LLC's operating agreement. aslongas the LLC is a partnership, it should file a Form 1065/sch K-1, shows the partner's share of income, deductions and credits from the business. Aslong as you hire EE(s), you ,as an ER, must match EE payroll w/h, FICA taxes and need to issue W2s to your EEs.you do not issue w2 to yourself; you are also one of the member in the MMLLC then you were supposed to receive a sch K-1of 1065. The K-1 would also report the guaranteed payments to you which would be subject to self employment tax on Sch SE. I mean any distributive share of ordinary LLC ordinary income and guaranteed payments are subject to SE tax, not fica tax



#5;as mentioned above, yes; you do need new FEIN.
#6; Each partner in a MMLLC is only responsible for the debt of the business that he personally guarantees. One of the primary benefits of a MMLLC business structure is ITS LIMITED LIABILITY; the partners of the business are not liable for the debts of the business. The ways debts are structured in an LLC frees the members from being responsible for the company's debts, which shields them from financial obligations for the biz.you, as a partner, are responsible for filing the income of the business on your own personal tax return.



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Old 02-18-2014, 11:18 PM
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Join Date: Feb 2014
Posts: 2
Tax Guru:

After Reading Your Reply, I Believe You Are Suggesting That We Have Three Options:

1.) File As A Partnership which Is the default classification.

2.) File As An S-Corp.

3.) File As A C-Corp.

Unclear about the following: If we file as a Partnership, can we
continue to use the same ID as the original SMLLC. In other words, just file the 1065 and life goes on.

If we choose S-Corp, is an Entity Classification form required as well as a new Id.?

Please clarify.

Thanks.



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Old 02-18-2014, 11:46 PM
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Join Date: Oct 2010
Posts: 5,224
Quote:
Originally Posted by JOSH View Post
Tax Guru:

#1;After Reading Your Reply, I Believe You Are Suggesting That We Have Three Options:

1.) File As A Partnership which Is the default classification.

2.) File As An S-Corp.

3.) File As A C-Corp.

#2;Unclear about the following: If we file as a Partnership, can we
continue to use the same ID as the original SMLLC. In other words, just file the 1065 and life goes on.

#3;If we choose S-Corp, is an Entity Classification form required as well as a new Id.?

Please clarify.

Thanks.
#1;correct ;so it is up to you

#2;as mentioned previously no in general, but it depends;you need a new EIN for the MMLLC as a partnership. I mean when you CONVERT from a sole proprietor , a SMLLC,to a partnership, MMLLC, you DO have to get a new EIN; since you take in partners and operate as a partnership, MMLLC, you need a new EIN.However, UNLESS you are converting to a partnership, the SMLLC remains the same entity, regardless of how many members are involved. The only thing that changes is the tax treatment.please contact the IRS for more info in detail.

#3;correct.aslongas you incorporate, you need a new ein.



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