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Hello and thank you for using Just Answer,A sinlge member LLC is generally structured as a sole proprietorship and filing Schedule C to report the business activity. Whe you change the sole prop to a partnership the business structure changes and you will be required to report as partnership. You will need to request a new EIN for the business.
You will be required to obtain a new EIN if any of the following statements are true.
Ok thank you.
So if forming a partnership with two others is my goal it sounds like trying to convert my LLC is not the simplest thing to do because it requires a new EIN.
Yes a new EIN would be required and the partnership formed.
So I might as well start a new corporation. Which type do you suggest? We are going to own the corporation equally between 3 partners. At this point we are primarly interested in getting some legal document created that ensures that Intellectual property is equally shared amongst the 3 people so that we can begin work immediately without fear that one member coud simply take intellectual property and leave without any legal ramifications.
A partnership. Your partnership agreement will cover the aspects you mentioned.
A partnership is the relationship existing between two or more persons who join to carry on a trade or business. Each person contributes money, property, labor or skill, and expects to share in the profits and losses of the business.
A partnership must file an annual information return to report the income, deductions, gains, losses, etc., from its operations, but it does not pay income tax. Instead, it "passes through" any profits or losses to its partners. Each partner includes his or her share of the partnership's income or loss on his or her tax return.
Partners are not employees and should not be issued a Form W-2. The partnership must furnish copies of Schedule K-1 (Form 1065) to the partners by the date Form 1065 is required to be filed, including extensions.
I hope the above has beem helpful an dthank you in advance for a positive rating.Here is a link to IRS publication 541 that covers partnership infohttp://www.irs.gov/publications/p541/index.html
Okay, thank you. Very helpful. I will go to somewhere like LegalZoom to find a partnership agreement.
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Thanks you. I feel that it will take several weeks to hammer out a partnership between the three of us. Is there some type of simple agreement that we can get in place as a temporary measure prior to a fully signed and agreed upon partnership agreeement - that will allow us to begin working together now and combining our intellectual property yet also ensures that each of us would own all intellectual property should things fall apart prior to signing an partnership agreement?
You may want to try this sitehttp://www.freelegalforms.net/FreeLegalForms.cfm?criteria=partnerThe partnership agreements are listed.