How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask Legalease Your Own Question
Legalease
Legalease, Attorney
Category: Business Law
Satisfied Customers: 16294
Experience:  14 years experience corps, LLC's and partnerships; preparation, negotiation of complex contracts and business agreements
20355756
Type Your Business Law Question Here...
Legalease is online now
A new question is answered every 9 seconds

I formed my LLC in Delaware which is NOT single-member LLC.

This answer was rated:

I formed my LLC in Delaware which is NOT single-member LLC. But I am confused between election between partnership LLC and Corporation LLC. What's the pros and cons between them?

Hello there

-

I am somewhat confused by your question. In Delaware and every other US state you can form a business entity which is either a partnership or a LLC or a Corporation. There is no such thing as a partnership LLC or a Corporation LLC. If you have an LLC with more than one member, then you should have a written operating agreement prepared to determine what the duties of each member are and how profits and losses are to be split (as well as setting out voting rights and what happens in the event that the LLC dissolves). Is there further information that you can give me to explain what you mean or what you are looking for?

-

MARY

-

Please press the 3rd, 4th or 5th smile face below so I will be paid for my time. I am paid NOTHING unless you press a positive rating below (I do not receive a paycheck and am paid only when you press the 3rd, 4th or 5th smile below). Doing so will NOT cost you additional money -- it acts as the "trigger" to Just Answer to pay me for my time. THANK YOU VERY MUCH !!!

Customer: replied 3 years ago.

When I apply EIN online, I met following question --


 


Since you are a multi-member LLC, we must initially classify you as a partnership. If you do not wish to accept the default classification of partnership, you can:



File Form 8832 (Entity Classification Election) to elect corporate status, or


File Form 2553 (Election by a Small Business Corporation) to elect S corporation status.

Henry -

-

That is different -- it is the IRS tax classification of the LLC and not how you operate the LLC and there is nothing that you file with the state to make any determination on this. What this means is that as a single member LLC you could file the tax return on your individual personal US taxes by using a Schedule C form. As a multiple member LLC, you must choose whether to be taxed as a partnership or as a corporation. That is something that should be discussed with the other members of the LLC and with a tax accountant depending upon the type of business that you want to operate. Once you decide which filing status is best for the LLC, you can do nothing and be listed as a partnership for IRS purposes or you can elect to be a corporation for IRS purposes.

-

MARY

-

Please press the 3rd, 4th or 5th smile face below so I will be paid for my time.

Customer: replied 3 years ago.

partnership LLC and Corporation LLC. What's the pros and cons between them for liability. I plan to use my LLC own rental properties. If there is a slip and fall lawsuit, the court may check it taxed as partnership and Corporation?

Henry -

-

The lawyers and courts do not check the defendants tax status -- this is what you are required to buy insurance for. Most multi member LLC's in the US will choose a corporate status to be taxed as a corporation, because as a partnerhsip you will have to file it on your own individual income tax return (you would get a statement from the partnership and then declare it on your own personal income taxes). If you are located in Canada I would think that you would want to avoid filing a US individual tax return and simply stick with the corporate tax return. But again, you should check with an accountant on the tax rates for each and how they will affect your own operations.

-

MARY

Legalease and 5 other Business Law Specialists are ready to help you

Related Business Law Questions