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Not sure if this is the right place to ask. Maybe you can help. We recently changed from a partnership to a single member LLC on our current company. We are now creating a new separate multi member LLC for a new company. I need to pull money out to put in that new company.

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3/16/2018
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 32,719
Experience: Taxes, Immigration, Labor Relations
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" changed from a partnership to a single member LLC " - actually means - the partnership is dissolved.

You will need to file a FINAL income tax return fro the partnership - form 1065 and mark it final in the header - and will issue final K1 statements to each partner.

After that done - the LLC will start operating as a single member LLC.

You will need to have a new tax ID or you may simply use your own SSN for LLC tax reporting.

That single member LLC will be disregarded entity - unless you specifically select it to be classified as a corporation.

If so - it is ignored - and all assets or funds in that LLC will be yours.

You may freely use these funds as you wish - and there is no restrictions.

Questions?

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Customer reply replied 1 month ago
I can use our business funds to put into the new company?

I am not clear what you meant under "our"
If that is a single member LLC - correct? - so you are the ONLY owner - thus these are YOUR funds.

You may have two pockets - and keep your business and personal money separately - but you are still an owner of both - and that is up to you how to use either money.

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Customer reply replied 1 month ago
I say "our" but it is really just my husband on the LLC. We already have a new EIN and all of that. But I haven't done a final tax file. I have not been sure how to take care of all of these things. It is hard to find info, and I don't know who to talk to for help.
Customer reply replied 1 month ago
I was told that my husband needs to start "paying himself out" so it shows on our taxes? We are trying to get a house, but most of what comes to business, stays in the business. We only member draw on necessities. We were told, now that it is LLC, that we have to separate things. That's why it's confusing.

I was told that my husband needs to start "paying himself out" so it shows on our taxes?

If that is a single member LLC AND you choose it to be classified as a corporation - then - yes - you will be on payroll.

But without election - a single member LLC is disregarded entity - and all realized income will be reported on owner's individual; tax return - schedule C as if there were no any LLC.

Still for legal protection - it is recommended to keep separate books and bank account for the LLC - it is recommended - but not required.

So - if your husband will pay himself - that will be on books - but not on the tax return.

No separate filing for a single member LLC.

The situation will be different if you choose it to be a corporation.

You may come back if you need any help.

I will followup as needed.

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Customer reply replied 1 month ago
it can be an LLC, classified as a corporation? How do I do that?

A Limited Liability Company (LLC) is a business structure allowed by state statute. Each state may use different regulations, and you should check with your state if you are interested in starting a Limited Liability Company.

Depending on elections made by the LLC and the number of members, the IRS will treat an LLC as either a corporation, partnership, or as part of the LLC’s owner’s tax return (a “disregarded entity”).

Specifically, a domestic LLC with at least two members is classified as a partnership for federal income tax purposes unless it files Form 8832 and affirmatively elects to be treated as a corporation.

And an LLC with only one member is treated as an entity disregarded as separate from its owner for income tax purposes (but as a separate entity for purposes of employment tax and certain excise taxes), unless it files Form 8832 and affirmatively elects to be treated as a corporation.

.

Here is a form to use

https://www.irs.gov/pub/irs-pdf/f8832.pdf

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Customer reply replied 1 month ago
Is this LLC classified as a corporation, something I can do still? How do I know if I have or haven't done it? Do I need to do it before the taxes are filed?

The LLC will be ONLY classified as a corporation if you specifically make such election.

If you do so - you should specify - an election effective date.

For reporting purposes - it might be better to start from January 1 - so you woudl not have two different return for the same year.

If you want to file timely - you may have an effective date 75 days before you file, but you may go back up to three years if you make late election.

However - there will be more complicated procedure.

Let me know if that help for better understanding.

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Customer reply replied 1 month ago
If I wanted to go back to the original file date of the LLC which is April 2017, I can do that? How do I do that? Is there somewhere I can learn more on this process?

Yes - you may do that.

That is referred as later election.

That might be a little complicated if you did not have any experience - and I might suggest to have a local CPA helping you.

But that is possible

The procedure is outlined in instructions

see page 6

https://www.irs.gov/pub/irs-pdf/f8832.pdf

and on the form - you will need to prepare Part II Late Election Relief

on page 3.

Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 32,719
Experience: Taxes, Immigration, Labor Relations
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