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As an entertainment LLC in Georgia what corporation status…

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As an entertainment LLC in...
As an entertainment LLC in Georgia what corporation status should I choose in order to file taxes seperately from my personal taxes and receive a seperate refund?
Submitted: 2 years ago.Category: Tax
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1/20/2016
Tax Professional: Tax.appeal.168, Tax Accountant replied 2 years ago
Tax.appeal.168
Tax.appeal.168, Tax Accountant
Category: Tax
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As an LLC, the business is already what is referred to as a flow through entity, meaning that the profit or loss from the business flows through to the individual LLC member or members. If you're an unincorporated single member LLC, you complete the form Schedule C. Setting up an S-corp will likely be the best business entity type for you. With an S-corp, two separate returns are filed, one for the business (S-Corp. return, Form 1120-S), and one your personal income tax return (The Form 1040). The profit and loss from the business flows through to you from the LLC via a Schedule k-1. On the other hand, if you are a multi-member LLC, a partnership return is completed (Form 1065). Note that being incorporated does not guaranteed that you will receive a refund.

Let me know if I can be of further assistance to you regarding this matter.

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Customer reply replied 2 years ago
What would guarantee the corporation receiving a refund?
Tax Professional: Tax.appeal.168, Tax Accountant replied 2 years ago

Filing as an S-corp, the profit or loss is passed through to you. Even if one is due, the S-corp will not receive a refund. The profit from the business is added to your regular income, the loss from the business is subtracted from your income on the form 1040. The return filed for the S-Corporation is an information return only. If a refund is due, it will be due to you as an individual, and not the corporation. As for answering the question, what will guarantee a refund, there are no guarantees, however, when deductions and credits exceed the tax liability, this generates a refund. Having made estimated taxes that exceed the tax liability also generates a refund.

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Customer reply replied 2 years ago
Why choose the S Corp and not the C Corp?
Tax Professional: Tax.appeal.168, Tax Accountant replied 2 years ago

In brief, to avoid double taxation. There are other pros and cons as well. Is your company large or small. If a small business, typically an S-Corp is the better business entity type. Instead of my reinventing the wheel, you can read about the differences between the two types of corps at the following links:

http://www.bizfilings.com/learn/s-corporation-vs-c-corporation.aspx

http://www.bizfilings.com/toolkit/sbg/tax-info/fed-taxes/s-c-corporations-create-different-tax-consequences.aspx

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Customer reply replied 2 years ago
Ok I'll read those and if I have a follow up question I'll contact you
Customer reply replied 2 years ago
Found a follow up question. Why not just incorporate the LLC?
Tax Professional: Tax.appeal.168, Tax Accountant replied 2 years ago

I mentioned that in my first response. SEE BELOW:

Setting up an S-corp will likely be the best business entity type for you. With an S-corp, two separate returns are filed, one for the business (S-Corp. return, Form 1120-S), and one your personal income tax return (The Form 1040). The profit and loss from the business flows through to you from the LLC via a Schedule k-1.

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Customer reply replied 2 years ago
changing the status of the LLC to LLC, Incorporated I will still only file one return as if it were still just an LLC and not Incorporated?
Tax Professional: Tax.appeal.168, Tax Accountant replied 2 years ago

You would not be changing the status of the LLC to an LLC, if you incorporate, you will be changing the status of the LLC to an LLC taxed as a corporation. When you incorporate, depending upon the corporation type that you choose, you would complete the applicable tax form, 1120-S for S corporation or the Form 1120 for the C-Corporation. You will still need to complete the Form 1040. Choosing to incorporate, you will complete two tax returns, one for the business and your personal tax return. Unincorporated, you complete the Schedule C as part of the Form 1040.

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