@friend80 My answers are shown in italic
It is a US multi member LLC and we had used a company from India and a separate freelancer from India to do our initial service work for which the work was performed outside US. Both the payments were done by the US company account bank. we did collect W 8BEN E form and W 8 BEN form and did not withhold any tax. We will be doing 1065 form. Thanks
My questions are
1) Did I do it correctly by not deducting the withholding tax
That you collected tax id of the NRAs is correct but un-necessary. This is because this was contract work done in India, the income source for the recipient(s) is Domestic/India and as such reported on their ITR. You also cannot withhold taxes for this work on behalf of the contractor ( TDS does not apply here because your entity is not an Indian entity.)
2)Am I allowed to claim this business expense?
Yes this is business expense ( at the entity level and reported on form 1065 ).
3) Could you let me know in which section I can claim it and do we need to upload the w 8 BEN forms
Note that form 1065 ( entity return of a pass through entity ) just records all the incomes and expenses of the entity and then issues k-1s to the partners for recognition at the partner level. You will have to use TurboTax Business for federal return and Fiduciary State for the State return.
4) Will there be any issues if i do not file a return
Yes --- a pass through entity must file a form 1065 and a copy of the K-1s ( using a K-3 ) to the IRS and the State. This allows the partners to recognize incomes and pay taxes based on the K-1s.
Since this is your first year , it may be worthwhile to consider professional help IMHO.
Is there more I can do for you ?
pk
