- Mark as New
- Bookmark
- Subscribe
- Subscribe to RSS Feed
- Permalink
- Report Inappropriate Content
Self employed
Hi
Great questions. Understanding Business Structure, Bookkeeping and Taxes is super important when going into a business venture.1) Should quarterly estimates come from the LLC under our EIN, or from us individually as partners using our socials? A Multi Member LLC is a pass through entity, meaning income flows through to individual partners. Estimated taxes should be paid at individual level with each partners SSN.
2) At the end of the year we're both individually responsible to pay taxes on 50% of our revenue right? How do we track joint deductions (fees, subscriptions, payments to contractors.. etc)? Do we just divide each sum in half? The partnership should be using bookkeeping software like QuickBooks or an excel spreadsheet to account for all expenses, income and distributions to partners. A partnership or LLC files its tax return on Form 1065. Each partner receives a Form K-1 from the partnership. K-1s report each shareholder's allocation of income, losses and other financial information from the business. The shareholder includes Form K-1 information on their individual tax return.
You will do a Business tax return for partnership. This is where expenses, income and distributions to partners will be accounted for. The business return will create a K1 for each partner. This will be used in individual return to report your share of income.
3) If we're using dedicated contractors, should we be employing them? Would there be any benefit to our restructuring our business and employing ourselves? Dedicated contractors should be issued 1099's at end of each year. If they contract on job to job basis, they are contractors. If they are on a time clock they should be employees. Restructuring: Doing an scorp election and both partners being w2 employees could save of on self employment taxes. How this works is you have each partner get a reasonable salary and any money distributed to partners outside of W2 income would only be taxed at ordinary income
4) My partner lives in NY and I live in TN. I set up the LLC in TN, but should I consider having it in another state? The issue is not where you have it registered. Understanding tax implications for each state s important. Like NY partner is NY resident. They will file individual resident tax return on all money earned. TN partner would file NY non resident tax return on all money earned in NY only.