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Level 1

Which turbotax package to buy for LLC . . .

Hi,

Would anyone have time to help answer the following questions?

An accountant filed paperwork in Alabama on behalf of our small licensed electrical business to become an LLC on 7/18/17.  We asked the accountant to set up some form of partnership for my husband and son to work together in our small electrical business.  The LLC that we filed paperwork for has 2 members, my husband, and our 27 year old son.  The accountant we used last year retired.  I’d like to try to do our taxes myself using TurboTax.  I’ll probably have a new accountant check them over before filing so I’m not looking for legal advice.  I’m just looking for answers to my questions relating to understanding the big picture of what we’ll be filing for my husband & myself and our son’s taxes. 

1.  In 2016, my husband was a sole proprietor the whole year.  In 2017, for the time period 1/1/17 – 7/17/17, my husband was a sole proprietor, and our son did electrical work as a sole proprietor/independent contractor. 

For the period 7/18/17 – 12/31/17, my husband and son were members of our LLC.  Which Turbo Tax should I buy to do taxes for my husband & myself and our son -  T.T. Deluxe and T.T. Business or can I get by with just one of them.

2.  Please correct me if I’m wrong on this – my understanding is that we do not need to file form 1065 for a partnership nor Schedule K.  I was a little confused at first, because of terminology - I thought we were a ‘partnership’, but if I’m not mistaken, I think I should quit using the term ‘partnership’ because as far as IRS is concerned, we are not a partnership, we’re an LLC.  Is this correct?

3.  Do I file 2 Schedule C’s for 2017 on behalf of my husband – one for 1/1/17 – 7/17/17 under the name of the sole proprietorship that we used to have and a second Schedule C for 7/18/17 – 12/31/17 for our new LLC? 

Do I need to file 2 schedule C’s for our son also who did electrical work as an independent contractor from 1/1/17 – 7/17/l7 and as a member of our LLC from 7/18/17?  Our son also has a graphic design business so I’m thinking I’ll be filing a third  Schedule C’s for him.  Does this sound correct?

Thank you in advance for any help you can give.  As I mentioned, I’m not asking for legal advice so you can skip all the disclaimers if you want.  I just like to do the taxes myself via TurboTax before we have an accountant check them.  Thank you. 

1 Best answer

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Level 2

Which turbotax package to buy for LLC . . .

First, multimember LLC's are required to file a separate tax return for the business entity. You will need to file a 1065 Form for the multimember LLC that was created in 2017 (of which your husband and son were members).  The business activity would be from the date it was formed (7/18/17) to the end of the year.  (You are correct that Form 1065 is also the income tax form used to file partnership returns.)  The LLC tax return will also generate a K-1 form for each member for them to include on their personal tax returns.

TurboTax Business (CD or download) is the product needed to create a multimember LLC tax return (Form 1065).  TurboTax Business does not create personal tax returns, so you will have to use TurboTax Self Employed (Online) or TurboTax Home & Business (CD or Download) to create the personal returns. The links provided in the product names include more information about each product.  The online products can only file one federal return per login ID, whereas the CD/download products can prepare/generate more than one return.  (There may be limits as to how many can be filed electronically, though, but more can be printed and mailed.) 

Second, for the two sole proprietor businesses from the first part of the year (1/1 - 7/17/17), you are correct that these would be included in the corresponding Schedule Cs of the personal returns. Your husband's sole proprietor business would be on his (or your joint) return and your son's sole proprietor business would be reported on Schedule C of his return.  

Third, if your son has another sole proprietor business (graphic design), then, yes, he would file this information on another Schedule C form with his personal tax return.  

[Edited 2/8/18, 3:40 pm]

View solution in original post

2 Replies
Highlighted
Level 2

Which turbotax package to buy for LLC . . .

First, multimember LLC's are required to file a separate tax return for the business entity. You will need to file a 1065 Form for the multimember LLC that was created in 2017 (of which your husband and son were members).  The business activity would be from the date it was formed (7/18/17) to the end of the year.  (You are correct that Form 1065 is also the income tax form used to file partnership returns.)  The LLC tax return will also generate a K-1 form for each member for them to include on their personal tax returns.

TurboTax Business (CD or download) is the product needed to create a multimember LLC tax return (Form 1065).  TurboTax Business does not create personal tax returns, so you will have to use TurboTax Self Employed (Online) or TurboTax Home & Business (CD or Download) to create the personal returns. The links provided in the product names include more information about each product.  The online products can only file one federal return per login ID, whereas the CD/download products can prepare/generate more than one return.  (There may be limits as to how many can be filed electronically, though, but more can be printed and mailed.) 

Second, for the two sole proprietor businesses from the first part of the year (1/1 - 7/17/17), you are correct that these would be included in the corresponding Schedule Cs of the personal returns. Your husband's sole proprietor business would be on his (or your joint) return and your son's sole proprietor business would be reported on Schedule C of his return.  

Third, if your son has another sole proprietor business (graphic design), then, yes, he would file this information on another Schedule C form with his personal tax return.  

[Edited 2/8/18, 3:40 pm]

View solution in original post

Level 1

Which turbotax package to buy for LLC . . .

Thanks, JulieCo, for the fast, thorough answer!  It was just the help I needed.  I appreciate your time and professional help very much!