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DanielleCPA
DanielleCPA, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 683
Experience:  Years of Experience in Business & Personal Taxes
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I am a member of an LLC with my wife -- we are the only members.

Resolved Question:

I am a member of an LLC with my wife -- we are the only members. We live in New York and both participate in the operations of the LLC. 1) It is a bit confusing whether we would use a Schedule C or a 1065 to report business income. In past years we have used a Schedule C, but I've read some articles leading me to question that. 2) Under this scenario, if we continue to file using a Schedule C, when opening a new financial account would I use my social security number, or an EIN?
Thanks!
Submitted: 10 months ago.
Category: Tax
Expert:  DanielleCPA replied 10 months ago.

DanielleCPA :

Welcome and thanks for your question!

Customer:

Hi!

DanielleCPA :

Because you operate your business as an LLC, you would need to file a Form 1065.

Customer:

I don't think it's that simple -- the IRS has some documentation that says that if an LLC is solely managed by a husband/wife and they file jointly, then a Schedule C could be used. I'm just trying to understand why one versus the other.

Customer:

In past years we've used a Schedule C.... not sure if switching now will cause an issue.

Customer:

Are you still there?

DanielleCPA :

I disagree that a husband/wife managed LLC can elect to file a schedule C vs a 1065. Although there are certain circumstances in which a husband/wife owned and operated business can file a Schedule C (this is known as a qualified joint venture), the fact that you live in a non-community property state and the business entity is an LLC disqualifies you from electing that treatment. Here is a link to an IRS published article attesting to that fact.

Customer:

Ok thanks. Income from the LLC to-date has been miniscule. Should I worry about changing treatments going forward?

DanielleCPA :

I would correct the treatment going forward and obtain an EIN if you don't already have one. I don't foresee any significant issues going forward with the change.

Customer:

Appreciate the follow-up. Have a great night!

DanielleCPA, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 683
Experience: Years of Experience in Business & Personal Taxes
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