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    2 Replies Latest reply on Aug 22, 2008 12:00 PM by Bridge

    LLC partnership tax benefits

    infinityplus1 Newbie
      My husband and I just started an LLC partnership, and I was wondering if someone can share their knowledge about the tax benefits. I understand that being a partnership, we can decide to pay each other out of the business earning as much as we like, and whatever is left in the business, we would then report it on our personal tax returns? If this is true, I don't understand what the benefit really is.
      I also noticed in one of the posts here that it might be benefitial tax-wise for a woman to own the larger percentage of the business, can someone elaborate on this?
        • Re: LLC partnership tax benefits
          LUCKIEST Guide
          LLC partnership tax benefits, Welcome

          Tell us more about yourself and your business.

          Where are you located?? Go to Members page and share.

          Every business should have an Accountant. Now is the time to ask
          the professional your questions.

          Good luck, LUCKIEST
          • Re: LLC partnership tax benefits
            Bridge Navigator
            First, lets cover terminology, LLC is a legal classification, not a tax classification. LLCs are not recognized entities for IRS purposes. The IRS will automatically classify an LLC as another type of organization for taxing purposes - in you case, from what you have described, they would probably classify you as a partnership for tax purposes.

            In a partnership, all income is passed through to the owners persoanl income tax.

            As an LLC, you can elect to be taxed as a corporation, and then file for a "S" corp. election.

            This would give you the benefit of paying yourselves reasonable wage to run the business and reporting any extra profit (after wages) as additional income on your personal tax returns. The benefit being you would not pay payroll taxes on the full income of the business.

            Do a search as this topic has been covered several times in the forums.

            Best of Luck,