LLC with DBA and two partners

[Xanatos247]

Hello,

I have an LLC, taxed as a partnership, with me and a partner that has one DBA for digital products and I want to set up another DBA for digital services.

1.) Would the income be taxed as a lump sum of all income regardless of what DBA the income is coming in from?

2.) Would the income be taxed before the money is sent to my partner and me or would the LLC have to pay the money to each of us and then we get taxed based on that portion of the income we receive? 

3.) If it's taxed based on the portions we receive does that mean we can't leave money in the LLC to reinvest back into the company?

4.)Would it be taxed quarterly or yearly?

Thank you so much for your time 🙂

[DavidS127]

All the business activities conducted through the LLC, regardless of the trade name used, are reported on the LLC Form 1065 U.S. Return of Partnership Income.  You can prepare a Form 1065 tax return with TurboTax Business.

The partnership does not pay income tax.  Instead, all the partnership income is "passed through" to the partners, who each receive a Schedule K-1 with their share of the partnership income and other items.  That Schedule K-1 is generated when the Form 1065 tax return is prepared after the end of the year.  The partners then use that Schedule K-1 to prepare their own individual Form 1040 tax returns.

The individual partners must pay the taxes on their partnership income, and should make estimated tax payments during the year if the partners have taxable income (from the partnership or any other source) for which there is no federal or state tax withholding.  The federal taxes due on the partnership income will include not only the income tax, but also self-employment (SE) tax for the partner's Social Security and Medicare tax.  So, if the partnership is earning money it is important for the partner to make estimated tax payments during the year.

See this TurboTax Help article on LLC taxation for more details.

See this TurboTax Help article on Estimated Tax Payments for more information.

[Xanatos247]

Thank you so much for the info!

So just to clarify-

1.) Does that mean all income has to be split between the two of us with all money taken out of the LLC account?

2.) Also when you say “estimated tax payments through the year” do you mean quarterly?

[Critter]

1.) Does that mean all income has to be split between the two of us with all money taken out of the LLC account?  No  money ever has to be distributed however the net profit on the return is passed thru to the partners in some % method you agree to.

2.) Also when you say “estimated tax payments through the year” do you mean quarterly?   Yes ... the individual partners pay estimated quarterly taxes based on their income tax needs. 

[Anonymous]

state law determines whether each of you can use the DBA designation or must use the name of the LLC.

while there are no federal income taxes for an LLC or partnership, some states do impose a state income tax. again the laws vary by state.   you have provided no info of what the LLC does, how it does it, or even if some of your business may be conducted out of state.  So while your resident state may not tax the activities, your business might be taxable in other states depending on their laws.   

the best thing you could do is to consult with a professional in your state.   there may be major items that are being overlooked.  for example do you need to collect sales tax?   

[Xanatos247]

Just for some background info on the LLC:

We sell digital graphic novels online and are incorporated in NY.

The second DBA I’d like to use to sell digital marketing services to clients. 

 Thank you for the advice, btw!

[Xanatos247]

Thank you for the clarification 🙂