My wife and I started an LLC last year and are 50/50 partners. The LLC itself requires minimal involvement to run. I thought that we can be both limited partners because we both spend virtually almost no time to run it. But my tax guy says one of us has to be a General Partner while the other can be Limited Partner. Is this right?
You tax guy is right but for you General and Limited Partner would be titles. Look at this IRS info https://www.irs.gov/businesses/small-businesses-self-employed/election-for-married-couples-unincorpo...
There is no such thing as an “LLC partner” because LLC owners are “members.” therefore, there are neither general partners nor limited partners. however, all members have limited liability
An LLC is either member-managed or manager-managed. this should be specified in the operating agreement that was included when the state forms were filed for its organization.
A member-managed LLC places management authority in the owners of the LLC (the “members:”). Each member has a voice in decision-making. Depending on the specifics of the operating agreement, the members might have equal say, or authority might be proportional to % of ownership. In a member-managed LLC, each owner is an agent of the LLC and has the power to bind co-owners by signing company contracts, borrowing money and making other decisions. But members must vote to approve such decisions.
A manager-managed LLC, is where the owners elect a manager or managers to handle day-to-day business decisions. Members still retain authority over some things. The manager is the main legal agent of the LLC and can quickly make decisions on behalf of the business without waiting for all members to approve. There could be one manager or multiple.
so for purposes of the k-1 in a member-managed LLC every member's k-1 would have the box general partner or member-manager box checked. in a manager-managed LLC only those who are involved the the management would have that boxed checked. the others would have limited partner or other LLC member box checked.
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