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Megan C
Megan C, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 16547
Experience:  Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
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My husband and I are co-members in an LLC. We are the only

Resolved Question:

My husband and I are co-members in an LLC. We are the only owners. He manages the business, while I have my own fulltime job.

We are unsure what type of LLC we should file as. Partnership? Single Member LLC (because we're married and he's the only one managing the business) or Multimember LLC?

What are the tax implications? And is it sufficient for us to pay the income tax at the end of the year or do we need to pay it quarterly? (if so, using what form?)
Submitted: 3 years ago.
Category: Tax
Expert:  Megan C replied 3 years ago.

Megan C :

Hello! I am a CPA here to assist you with your tax questions. My goal is to provide you with excellent service today.

Megan C :

How are you today?

Megan C :

Since there are two of you in the LLC, you would file as a partnership, with each of you receiving income on form K-1.

Megan C :

So, each year you would file form 1065 for the partnership, outlining the income and expenses of the partnership.

Megan C :

The alternative would be to file as a corporation, or S Corporation - but you would have to file an election for that. The default overall is to be taxed as a partnership

Megan C :

With a partnership or S Corp taxation, tax will flow through on your personal tax return.

Megan C :

You will need to estimate your tax quarterly using form 1040-ES

Customer: replied 3 years ago.
Isn't a Partnership when you share euqal parts of the managing of the business? He works fulltime on the business, while I have my own fulltime job.
Customer: replied 3 years ago.
So what makes us a Partnership vs a Multimember LLC?
Expert:  Megan C replied 3 years ago.
An LLC is a "disregarded entity" for tax purposes. There's no special LLC tax return. When there is more than one owner, even if they are husband and wife, then it is a partnership. This is true even if one of the owners does not participate in the management of the company.

So, by default the multi member LLC is taxed as a partnership.

Is there anything else I can assist you with today? If not, please rate my response as "excellent" so that I may receive credit for assisting you today.
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