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RGJFCJ
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Two Schedule C's for a simple LLC

I changed my sole proprietorship to an LLC owned by myself and my spouse. Now I am asked to prepare two Schedule C's. That's a lot of extra work. What's the advantage, and can I ignore that and do what I have done for years?

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2 Replies

Two Schedule C's for a simple LLC

If you are in a community property state, you can make an election to file two Schedules C.

 

See https://www.irs.gov/pub/irs-drop/rp-02-69.pdf

 

If you do not so elect or you are in a common law state, then you will have to file Form 1065 for your multi-member LLC.

 

See also https://www.irs.gov/businesses/small-businesses-self-employed/election-for-married-couples-unincorpo...

Two Schedule C's for a simple LLC

No, you can't do what you have always done.  You bit the LLC apple, now you have to deal with it.  Registering as an LLC has significant consequences you obviously didn't know about.

 

If you live in a community property state, you need 3 Schedule Cs.  One reports your income and expenses as a sole proprietor.  The second reports half the income and expenses of the LLC under your name, and the third reports half the income and expenses of the LLC under your spouse's name.

 

If you do not live in a community property state, the LLC is reported on a form 1065, Partnership Return.  This is a separate form, and it requires Turbotax Business, not "self employed" or "home and business."  The Business program is only available as a download or CD for PC, there is no Mac or online version.  The deadline for the form 1065 is March 15, not April, and the penalty for late filing is $195 per month per partner.  When you prepare the 1065, it will generate a K-1 statement for each partner that carries the partner's share of income and expenses to their personal tax return.   Your personal form 1040 tax return will include a schedule C for the sole prop, and both K-1 statements, along with any W-2s, personal deductions, credits and dependents. 

 

You also need a new EIN for the LLC, you can't use your SSN or the EIN you used as a sole prop.

 

You may want to visit an accountant to help you understand what you did to yourself.  Good luck.

 

 

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