It’s me and my dad in the LLC. We’re talking simple income, not much. We made the LLC mainly for liability protection. We’ve tracked all income perfectly. Now I’m trying to figure out what to file.
I thought 1065 was the way to go, but it seems like that’s for larger businesses? I don’t want to be overtaxed or deal with double taxation. What should I do here?
Also, I’m not sure if I’m considered an S corp or C corp. How do I check that? Thanks in advance!
Jael said:
The first step is figuring out if your LLC is just a partnership or if you elected to be taxed as a corporation.
If it’s a partnership, then yes, you’d file a 1065 and issue a K-1 to each member.
How can I figure that out? I have all the paperwork from when we set up the LLC. I’ve checked them, but there’s no mention of S corp or C corp anywhere, just a certificate confirming the LLC.
I can share the documents (with personal details redacted) if that helps. For now, here’s a screenshot:
@Tru
Did you ever file paperwork to be treated as an S corp or C corp? Also, have you filed any business taxes for 2022 or 2023? If you have copies, they might help answer this.
Jael said: @Tru
Did you ever file paperwork to be treated as an S corp or C corp? Also, have you filed any business taxes for 2022 or 2023? If you have copies, they might help answer this.
No, I’ve never filled out anything about S or C corp.
This is actually our first year filing taxes because the LLC didn’t make any money until 2024.
@Tru
With that income level, it’s actually a good thing you didn’t choose S corp status. As a partnership, you can both claim the QBI deduction on your income without worrying about payroll taxes.
Jael said: @Tru
With that income level, it’s actually a good thing you didn’t choose S corp status. As a partnership, you can both claim the QBI deduction on your income without worrying about payroll taxes.
Oh, that’s great news! I was worried about being double-taxed if it was a C corp. I’ll go ahead and file the 1065 to generate the K-1s for each of us.
It looks like you’ll need to file a partnership return (Form 1065) and possibly some additional paperwork for your state. After that, the net income gets divided between you and your dad and reported on Schedule K-1.