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I own a small business as a sole proprietor, and am also a partner in a llc. I feel like I'm being taxed to death, and need to hire employees asap in the llc, and think it would be wise to combine the two, to the llc, but not sure how. Can you give me any ideas?
I own a small business as a sole proprietor, and am also a partner in a llc. I feel like I'm being taxed to death, and need to hire employees asap in the llc, and think it would be wise to combine the two, to the llc, but not sure how. Can you give me any ideas?
It is called a merger and a CPA thing. Ask your CPA.
I understand it's merging two businesses together. I do my own taxes, I do my own everything. I used a CPA, who in turn used employees to do my paperwork, and didn't file the appropriate taxes for me. They charged me 1500.00. I did all the Quickbooks, turned in my diskette, and they wrote out the checks and I signed them. Ok, my fault, I know ultimately it's my responsibility, but I was fined for not having my taxes in on time, I paid my dues...twice, so I learned how to do my own taxes, and own paperwork, and am good to go on that. I've been doing my own for 10 yrs. My problem is I opened my first business by myself, I started my LLC with a partner myself, why isn't there some way, or someone out there that can tell me how to combine these together. It cant be hard, I just want to do it correctly. Why should I pay workers comp. twice, if employees chose to work at both locations. Why should I pay taxes twice, do paperwork twice, etc...I know I should have just added the second to my first, but I didn't realize all the double's, and also when I added the LLC, I would have had to change the first business to a partnership anyway. I guess I'm just lost.
Well there is the ownership thing. You are taking a business you own 100% of and merging it with another business you probably own 50% of. I assume you don't want your partner or partners of the LLC to get a free 50% of your business?
So there needs to be some legal thing and agreement between you and your partners. This could re-apportion the percentage you own in the partnership. Maybe after the merger you would then own 75% of the partnership?
All depends of the value of both - a CPA thing.
Or I suppose the partnership could purchase the business from you. But again, what is it worth? (Don't tell me, but for your own info.)
When publicly traded corporations do this, there might be a "stock swap". Or cash paid. Or a combination of both.
There may be tax advantages to merging one way or another. If the partnership buys it, you might have personal capital gains to worry about. Maybe you could depreciate the business purchase or assets owned by the business?
You can just consult with a CPA for not too much. Don't need to go to the same CPA...
A good CPA can be well worth the money paid out. They will help you to best navigate the structure. They will also help you kind tax breaks and help manage your tax load.
A CPA give sound advise is cheaper than an attorney to help you unscrew any mistakes you may have made trying to do things pro se.
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I do pay certain CPA and enrolled agents by the hour for advice on such matters (within their expertise). I avoid dorky attorneys like the plague, they really can mess things up, but solid advice is worth paying for (if you can find it).
You may have to write a new LLC or modify your operating agreement of existing. Presuming both businesses are substantially the same, you will need to re-state your 'capital contribution' to the LLC, if you are to merge your stand alone business to existing LLC.
I can see benefits and advantages to each, but if you are doing all the paperwork, you would know the true benefit. I assume you elected to tax the LLC as a 'pass-through' rather than corporate entity (You have your choice when you create LLC). I am always skeptical of partnerships, as they claim they are more work / hassle than a marriage, and with all the responsibilities too.
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