An LLC is unique in that it can be taxed as a disregarded entity, partnership, C Corp or an S Corp. A single member or owner LLC can be taxed as a disregarded entity, C Corp or S corp. A multi-member or owner LLC can be taxed as a partnership, C Corp or S corp. Unless an LLC elects corporate tax classification by filing Federal Form 8832 (C Corp) or Federal Form 2553 (S Corp) with the IRS when it is formed, a single member or owner LLC is taxed as a disregarded entity and a multiple member or owner LLC is taxed as a partnership.
When growing a business, entrepreneurs typically reach a point in the process where they must consider the prospect of adding staff. There are several important things to consider when hiring employees, which include: labor laws, compensation structure, fringe benefit programs, and workers’ compensation.
The members of an LLC taxed as a partnership cannot take W-2 salaries or wages like employees of the LLC and cannot therefore have their compensation processed through a payroll service. However, they make take salaries in the form of “guaranteed payments” and profit distributions from the LLC as discussed in greater detail below.
One approach to calculating intercompany management fees is to analyze the labor being spent on each business and then allocating overhead costs as a percentage of labor to determine a total intercompany fee. Also, there may be a particular legal bill or other unique costs that may be charged directly to a subsidiary or affiliate company in addition to the normal intercompany fee.
In order to obtain a credit or refund, an amended federal or state tax return must be filed within 3 years after the date you filed the original return or within 2 years after the date you paid the tax, whichever is later.
We do not know how the tax status of your sole owner LLC, Sole proprietorship, C corp or S corp, but a vehicle used for both business and personal use (a mixed use vehicle) does not have to be purchased and owned by the business in order for the business to deduct expenses associated with the business use of the vehicle.
We do not know exactly how you recorded the software and patent development costs on your Balance Sheet or whether you amortized any of those development costs, but if you have stopped selling the software, have abandoned any further development or sale, and the software programming is not saleable, then…