Im starting a LLC, how do I literally distribute profits? Just write a check to member or...?
...is there paperwork/IRS form?
I'm not sure how to pay the member. Just write a check or do I need to file paperwork as a trial and or use a form? Please advise!!!
- Anonymous9 years agoBest Answer
Single member LLCs are taxed as sole proprietorships by default. The LLC can elect to be taxed as a corporation however. If taxed as a sole proprietorship, just write the check to the member. Remember that it is not a deduction. If taxed as a corporation, either write a payroll check, declare a dividend or designate the payment as return of capital. Report payrolls on Forms 941, 940, W-2 and the applicable state forms. Report dividends on Form 1099-DIV and report returns of capital on Form 1099-B. If the corporation is further classified as an "S" corporation, any profits not distributed in cash or property are reported on Schedule K-1. Note that W-2s, 1099-DIVs and 1099-Bs must be furnished to the member by 1/31/08 and filed with the IRS by 2/28/08. Schedule K-1 must be furnished to the member by 4/15/08 unless an extension is filed for Form 1120-S which extends the due date to 9/15/08.
Multiple member LLCs are taxed as partnerships by default. Like the single member LLC they can elect to be taxed as a corporation (with profits distributed as described above). If taxed as a partnership, determine if the profit is a "guaranteed payment" which is classified differently on the tax return (and Schedule K-1) or a general partnership distribution. If a general distribution, report it as a withdrawal of capital on Schedule K-1. Members of a partnership are not furnished W-2 forms.
For additional information, visit www.irs.gov Keyword: LLC or see http://www.irs.gov/faqs/faq-kw105.html
Pursuant to Internal Revenue Service guidance, be advised that any federal tax advice in this communication, including any attachments or enclosures, was not intended or written to be used, and it cannot be used, by any person or entity for the purpose of avoiding penalties imposed under the Internal Revenue Code.
- larabeeLv 43 years ago
is this a 2 or greater individual LLC (a bypass-via) or a single individual (skipped over?) Tax (federal -- do no longer be attentive to each state's rules) bypass-via -- From a tax attitude, there isn't any variety you are going to be able to desire to record with the IRS, in spite of the actual undeniable fact that remember which you will could desire to record a variety 1065 for the LLC each and every 12 months reporting on entire earnings/loss. single individual -- no longer something. Its skipped over for federal earnings tax legal you may desire to verify your working or LLC contract (no longer the formation certificates). If its silent or you haven't any longer have been given one (in case you haven't any longer have been given one, evaluate getting one in place -- no longer having one is a undesirable theory) then there isn't any in line with se requirement yet interior the interest of heading off destiny confusion or doubt i could have whoever runs the LLC (the members if its member controlled, or the executive) sign a document that explains the date of distribution, the quantity to its members, the reason in the back of it in case you will like (tax distribution, annual earnings distribution, and so on.) and likewise save copies of the verify and the cashed verify as quickly because it clears the LLC's financial corporation account. notice this interior the absence of particular suggestion through fact that at times in case you have been in a combat you would be wanting to document much less or greater. BTW, in case you desire to work out samples of LLC written strikes, I sell them on scribd as corporaider. even nonetheless, you do no longer could desire to apply those. As I suggested up perfect below legal records -- in the journey that your LLC is silent as to required records there isn't any in line with se legal requirement -- yet having something is sturdy so as that (a million) you could provide records to any third events or experts (we could say your accountants) interior the destiny and (2) it avoids any destiny fights with members who forget/declare you in no way made the distribution or authorized it. playstation I additionally grant LLC agreements on the marketplace on scribd. no longer the certificates of formation however the working contract/LLC contract that gadgets forth the governing mechanism. Mine don't have particular provisions on documenting distributions, nonetheless. back, purchase them or no longer (its in ordinary terms a lark for me) yet in case you haven't any longer have been given one, you rather could desire to -- get it from someplace.