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Barbara
Barbara, Enrolled Agent
Category: Tax
Satisfied Customers: 2825
Experience:  18+ years of experience in tax preparation; 25+ years of experience as a real estate/corporate paralegal.
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I am starting an event planning business in California with

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I am starting an event planning business in California with a friend. We want to form a simple partnership. We will have some start up costs as well as business expenses. We also would like to be able to purchase our health insurance and pay for it through the business as well as other expenses. What are the limitations or restrictions and how do,we capitalize the business to be able to maximize the tax benefits for us personally. Our husbands work in jobs where they do not have health insurance either so we would all be part of the company with my friend and I as employees or General Partners or something.

Welcome. My name is XXXXX XXXXX it will be my pleasure to assist you with your tax question today.

 

You may want to reconsider the entity you are planning to form. Since you mentioned health insurance, an S corporation would be more beneficial from the health insurance standpoint. Please see the following for detailed information regarding how health insurance is treated when paid by a partnership vs. an S corporation:

 

http://www.politoeppich.com/article_pdfs/9-Partnership%20and%20S%20Corporation%20Health%20Insurance%20Premiums%20LH.pdf

 

Please let me know if you require further information or clarification.

 

Thank you and best regards,

Barb

Hi, Rebecca.

 

If you have any follow-up questions regarding any of the information I have provided to you, please come back to me here, and I will be happy to assist you. If not, please take a moment to rate my answer to you since that is an important part of being an expert on JustAnswer, and I strive for excellence.

 

Thank you and best regards,

Barb

Customer: replied 3 years ago.
We are trying to avoid the expense or details of an S Corp or LLC. What CAN we do within the confines of a Partnership?

Hi, Rebecca.

 

The expense and details would be similar whether you form an S corporation, partnership, or LLC. In the case of an LLC, it is a disregarded entity for tax purposes so you would have to elect to be taxed as either a partnership, S corporation or C corporation.

 

S corporations and partnerships are pass-through entities which file their own tax returns and the income/loss flows through to the shareholders (S corporation) or partners (partnership).

 

I specifically addressed your concern of health insurance, which is more advantageous to you and your friend if you form an S corporation rather than a partnership (as illustrated in the link I provided).

 

Please let me know if I can assist you further, and I will be happy to do so.

 

Thank you and best regards,

Barb

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