Finance

Have Finance Questions? Ask a Financial Expert Online.

Ask an Expert,
Get an Answer ASAP!

Finance

A husband and wife have been filing a partnership return for

Customer Question
a home healthcare business and...
A husband and wife have been filing a partnership return for a home healthcare business and another partnership return for a pharmacy. Each partnership has been filing a 1065 with a 50 percent share for each spouse. I know there is a limited liability
benefit if they form LLC's. My question: Would there be any tax advantage to forming LLC for each partnership? I
Submitted: 2 years ago.Category: Finance
Show More
Show Less
Ask Your Own Finance Question
Answered in 15 minutes by:
5/25/2015
Financial Professional: Lane, JD, CFP, MBA, CRPS replied 2 years ago
Lane
Lane, JD, CFP, MBA, CRPS
Category: Finance
Satisfied Customers: 13,242
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
Verified
Hi,
Nope, none whatsoever.
As a matter of fact you will continue to file a partnership return because you'd be a multiple Member LLC (which is taxed by a partnership, by default)
And yes. liability protection from personal assets AND an additional layer of liability protection if you set up two separate LLC's because then creditors, lawsuits, etc can only come against the LLC it's doing business with (Not you, personally NOR the other LLC).
Now, if you are at a profit level that's WELL above your expenses (Plus what a reasonable salary would be for what you contribute in services) electing S-Corp taxation for the LLC CAN save you some in SE taxes.
The S-Corp is a pass- through as well. And, for many, you end up paying the same in both halves of SS & Medicare (1/2 from your required S-Corp salary and the other 1/2 paid by the company, YOU) as you do now in SE tax.
However once your are WELL above your salary and other expenses in the S-Corp, the rest of that profit is distributed on the K-1, essentially as a dividend ... NO social security & Medicare( AKA Self-Employment tax).
Let's say that you have a gross of 100,000 take a 50,000 salary and have 25,000 in other expenses ... You'll still pay then same in SS & Medicare as you do now in SE Tax on your salary (again, 1/2 out of your W-2 and 1/2 paid by the S-Corp (you).
But on that remaining $25,000 in profit, there's no 15.3% tax.
So the tax savings is 25,000 x .153 = 3825
HOPWEVER, that's ABOUT what having a CPA firm do your payroll, W-2's, pay-in payroll taxes monthly, and do your quarterly 941s and the 940 would charge ... Mire in many places
So only once you are HIGHLY profitable does the S-Corp really make sense, given the additional administrative overhead, headaches, and inflexibility.
Although there's no real tax savings for the LLCs, I would consider spending the 300 bucks or so each to set up the LLC. (600 for two). Now, if you have those liabilities covered in other ways, maybe not.
let me know if you have questions ...
lane
Ask Your Own Finance Question
Ask Lane Your Own Question
Lane
Lane
Lane, JD, CFP, MBA, CRPS
Category: Finance
Satisfied Customers: 13,242
13,242 Satisfied Customers
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986

Lane is online now

A new question is answered every 9 seconds

How JustAnswer works:

  • Ask an ExpertExperts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional AnswerVia email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction GuaranteeRate the answer you receive.

JustAnswer in the News:

Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.

What Customers are Saying:

I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response...

T.G.WMatteson, IL

I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight.

BonnieChesnee, SC

Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation.

JohnMinneapolis, MN

Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with.

OrvilleHesperia, California

Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help.

Mary C.Freshfield, Liverpool, UK

This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!!

AlexLos Angeles, CA

Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult.

GPHesperia, CA

< Previous | Next >

Meet the Experts:

Rakhi Vasavada

Rakhi Vasavada

Financial and Legal Consultant

2,608 satisfied customers

Graduated in law with Emphasis on Finance and have have been working in financial sector for over 12 Years

Megan C

Megan C

Certified Public Accountant (CPA)

2,218 satisfied customers

Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level

Manal Elkhoshkhany

Manal Elkhoshkhany

Tutor

1,920 satisfied customers

More than 5000 online tutoring sessions.

JKCPA

JKCPA

CPA

844 satisfied customers

Bachelors degree and CPA with Accounting experience.

Eric

Eric

Financial Manager

559 satisfied customers

Loan servicing, counseling and real estate expert. Foreclosure Expert and Financial Planner.

R. Klein, EA

R. Klein, EA

Accountant

480 satisfied customers

TurboTax Expert. QuickBooks Certified Pro Advisor

Dimitry K., Esq.

Dimitry K., Esq.

Attorney

332 satisfied customers

NASD Licensed Rep, 1997-2001, Business Attorney

< Previous | Next >

Related Finance Questions
Am I able to deduct the income from my capital gain.........
Am I able to deduct the income from my capital gain......... for expenses on my personal losses, like an attorney fees, expert witness etc?… read more
Lane
Lane
JD, CFP, MBA, CRPS
13,242 satisfied customers
I have a question related to how my taxes will be calculated
Hello. I have a question related to how my taxes will be calculated for my job overseas. For 2017, I don't qualify for the physical presence test as I was home for six weeks (42 days). Given this fact… read more
taxmanrog
taxmanrog
Master\u0027s Degree
768 satisfied customers
My employer has closed the defined benefits offered at our
My employer has closed the defined benefits offered at our company and offered to roll over to IRA and my current employer. They setup an IRA account that I could deposit the funds into. I have since … read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
I want to pay on my amazon prime account and I can't get to
I want to pay on my amazon prime account and I can't get to the account. … read more
Manal Elkhoshkhany
Manal Elkhoshkhany
Tutor
1,920 satisfied customers
I had a dental appt on Dec 29th and wrote a check from my
I had a dental appt on Dec 29th and wrote a check from my HSA acct for $2000. Yesterday I received a 1099-sa from the bank. It does not reflect the $2000 check of course. is there anything I can do to… read more
Mark Taylor
Mark Taylor
Certified Public Accountant
Masters
2,275 satisfied customers
Ethereum deposit question, I transferred some ethereum from
Ethereum deposit question, I transferred some ethereum from one exchange to erherdelta. Then I deposited the fund by putting the amount in the white deposit box and pressed blue deposit button. I forg… read more
Specialist Sean S.
Specialist Sean S.
Computer Support Technician
819 satisfied customers
Robin, question on filing taxes. My father in law passed
Robin, question on filing taxes. My father in law passed away about 4 years ago. He and his sister had a farm, and his 1/2 was willed to his 3 children one of which is my wife. My wife and I have take… read more
TaxRobin
TaxRobin
Vocational, Technical or Trade School
1 satisfied customers
I started a partnership llc in Dec. 2016, I did my 1040
Hi, I started a partnership llc in Dec. 2016, I did my 1040 taxes for that year since it was only that one month. I need to file 1065 now, so my question is I only have one months worth of income for … read more
PDtax
PDtax
Owner
Master\u0027s Degree
1 satisfied customers
I am a tax preparer ,but I have a PTIN only (so i am not an
Hello, I am a tax preparer ,but I have a PTIN only (so i am not an accountant or an Enrolled Agent). Can I apply for an EFIN (to be able to e-file returns)? In case I qualify for an EFIN,would this me… read more
Barbara
Barbara
Enrolled Agent, Paralegal
3,785 satisfied customers
I need to understand how to navigate the affordable care act
I need to understand how to navigate the affordable care act if I have little to no taxable income. My children receive SS payments from their retired father. I work part-time. My part time income for… read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
How to show in accounting books for checks written to
How to show in accounting books for checks written to oneself who an officer of the company does not run pay toll but take K1 at the year end of his own S corporation… read more
Fred Rook
Fred Rook
Corporate Controller
BSBA
64 satisfied customers
I have a PTIN only (so i am not an accountant or an Enrolled
Hi! I have a PTIN only (so i am not an accountant or an Enrolled Agent). Question:Can I prepare unlimited tax returns per year?or there is a limit in my case(higher designations are needes to be able … read more
Chad EA, CFP ®
Chad EA, CFP ®
IRS Enrolled Agent, CFP(R),
Master\u0027s Degree
1,067 satisfied customers
I would like to know what the value would now be of an
I would like to know what the value would now be of an annuity account that was opened in 2008 with an initial deposit of $78,835.00 and the only withdrawals from this account were the mandatory semi-… read more
PDtax
PDtax
Owner
Master\u0027s Degree
1 satisfied customers
Have some questions about my business for the coming tax
Have some questions about my business for the coming tax year as far as payroll vs. no payroll (because of the new LLC 20% tax rate) and retirement … read more
Carter McBride
Carter McBride
LLM
233 satisfied customers
I am single, divorced and own my home. 2017 my daughter and
I am single, divorced and own my home. 2017 my daughter and her family, 2 adults 3 children have lived with me while they build their home. They are custom home builders and file their own taxes. My q… read more
Chad EA, CFP ®
Chad EA, CFP ®
IRS Enrolled Agent, CFP(R),
Master\u0027s Degree
1,067 satisfied customers
I run a Delaware single owner LLC operating out of Arizona.
I run a Delaware single owner LLC operating out of Arizona. We earn hundreds of thousands annually. Given the recent reform in tax code, would we save a lot of money converting to an S Corp?… read more
Chad EA, CFP ®
Chad EA, CFP ®
IRS Enrolled Agent, CFP(R),
Master\u0027s Degree
1,067 satisfied customers
Is the following link a Trustworthy app to invest in mutual
Is the following link a Trustworthy app to invest in mutual funds? https://robinhood.com/referral/ethanc123/?gclid=Cj0KCQiA-ebSBRC8ARIsAGuxJIrZH4jkVfJSxc_GvpqlOszZq2FrCQErIQv7hqqZLO1MuuQCFpH3fvAaAhB2E… read more
Carter McBride
Carter McBride
LLM
233 satisfied customers
I own 2 homes in Hammond in. Free and clear worth around
I own 2 homes in Hammond in. Free and clear worth around 150k, total. Right now they net around 24k - expenses (8k) year, haven't filed income taxes in while on them or ref job (lost 2 years ago) cred… read more
taxmanrog
taxmanrog
Master\u0027s Degree
768 satisfied customers
Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Show MoreShow Less

Ask Your Question

x