Small Business - Tax related question

[dc1225]

Originally Posted by Philip T

An LLC?

Ok, at least you are making this interesting . . . . digging a little deeper -- and btw, I R Not an accountant. Just a lowly engineer / contractor type, so this is just mindless backyard chatting -- not real advice . . .

The LLC -- is it:

A. Just one owner? or
B. A "partnership" of real people? (no corporations involved) or
C. A "partnership" where the General Partner is a Corporation?

Asking because the LLC (for tax filing purposes only) it will be viewed as:

A. A sole proprietorship or
B. A partnership, or
C. A corporation

Depending on A, B, or C, above -- and that is the approach and forms the IRS will follow.

Two owners, one owns 49%, the main investor owns 51%. Each have their own LLC.

[Philip T]

Originally Posted by dc1225

Two owners, one owns 49%, the main investor owns 51%. Each have their own LLC.

So that maybe sounds like maybe two LCCs, each with one owner, each?

I suppose that could be viewed (for tax purposes) as two Sole Props working together as a Joint Venture. (whew, simple life can be made complex!).

So do you all plan to split (49/51%) expenses, and then do the same with profits?

I would be sorely tempted to leave certain portions (e.g. car, phones, advertising) to just one of the Sole Prop/LCCs depending on which needed their taxable income offset any given year. But that takes some planning.

Back towards the level of your question -- start with this:

Covers the taxing structures for various LLC models we chatted above:

Other Useful Forms for Limited Liability Companies (LLC)

Some very general guidelines for business expenses:

Business Expenses

And a specific guide >>>

Online Version

Publication 535 (2007), Business Expenses

And PDF

http://www.irs.gov/pub/irs-pdf/p535.pdf

Happy Reading!

[dc1225]

Originally Posted by Philip T

So that maybe sounds like maybe two LCCs, each with one owner, each?

I suppose that could be viewed (for tax purposes) as two Sole Props working together as a Joint Venture. (whew, simple life can be made complex!).

So do you all plan to split (49/51%) expenses, and then do the same with profits?

I would be sorely tempted to leave certain portions (e.g. car, phones, advertising) to just one of the Sole Prop/LCCs depending on which needed their taxable income offset any given year. But that takes some planning.

Back towards the level of your question -- start with this:

Covers the taxing structures for various LLC models we chatted above:

Other Useful Forms for Limited Liability Companies (LLC)

Some very general guidelines for business expenses:

Business Expenses

And a specific guide >>>

Online Version

Publication 535 (2007), Business Expenses

And PDF

http://www.irs.gov/pub/irs-pdf/p535.pdf

Happy Reading!

your assumptions are all correct, Thanks!