I do independent consulting part time. I have a single member LLC set up and I am taxed as a pass-through entity (i.e. not taxed as an S Corp). I do not have any employees and I do not pay myself a salary. I currently have a SEP IRA set up.
I also work part time at a company as an employee (in a different field of business), where I contribute the max allowed by the IRS to that company's 401k plan.
I have been talking with a colleague about joining me in my business. My partner will not be an employee and we will not hire any employees. We do not have/will not have any assets. Our distributions will be based on the consultant fees we each earn less a share of the expenses, so the % will change every year. I am assuming my business would go from being a single member llc to a multi-member llc.
1-How do retirement contributions work? I want to save the max I possibly can (25% of net earnings up to cap of $57k less my other 401k contributions). My partner does not want to contribute anything to a retirement account right now. Can we each have our own SEP-IRA's and contribute what we want to? is the max contribution for each of us still 25% of net earnings up to cap?
2-Do I need to notify the IRS?
3-Assuming we will each need a K-1 at the end of the year? Do our respective retirement contributions get recorded on K-1?
Thanks.
