Help in advising how to set up new business

[Bonnie]

I need a bit of advice for a customer who is starting a new business. Newly married same sex couple starting massage business. I've done return for one of the men for many years and he has a great job with income over 100,000. Married now to second man who is now massage therapist and they are opening a massage therapy business. Want to put it in both names and are forming LLC with the state. Because of LLC cannot use joint venture. I'm wanting to tell them put it in name of the one who is the therapist and do Sch C. What advice does anyone else have. I don't do a lot of business returns so unsure of how to advise. What determines in a partnership if the partners are general or limited? Would S Corp or Partnership be better. Thanks for any help

[Uncle Sam]

Massage Business

Check your state's rules on whether or not all principals are required to be licensed
in order to be in business together as principals.

[TAXNJ]

Step 1

I need a bit of advice for a customer who is starting a new business. Newly married same sex couple starting massage business. I've done return for one of the men for many years and he has a great job with income over 100,000. Married now to second man who is now massage therapist and they are opening a massage therapy business. Want to put it in both names and are forming LLC with the state. Because of LLC cannot use joint venture. I'm wanting to tell them put it in name of the one who is the therapist and do Sch C. What advice does anyone else have. I don't do a lot of business returns so unsure of how to advise. What determines in a partnership if the partners are general or limited? Would S Corp or Partnership be better. Thanks for any help

Step 1 - advise them to get an attorney (make that a TAX attorney, not just an attorney) to handle legal issues

Step 2 - you advise on the bookkeeping and tax issues

[ATSMAN]

I need a bit of advice for a customer who is starting a new business. Newly married same sex couple starting massage business. I've done return for one of the men for many years and he has a great job with income over 100,000. Married now to second man who is now massage therapist and they are opening a massage therapy business. Want to put it in both names and are forming LLC with the state. Because of LLC cannot use joint venture. I'm wanting to tell them put it in name of the one who is the therapist and do Sch C. What advice does anyone else have. I don't do a lot of business returns so unsure of how to advise. What determines in a partnership if the partners are general or limited? Would S Corp or Partnership be better. Thanks for any help

I am assuming you are not an attorney. I would not advise any of my clients on the issues of business entity creation other than how each of them is taxed and the general taxation rules.

I have given my clients the IRS DVD that talks about small business taxation (forget the Pub #)

Here is a link on partnerships that may be useful to you. http://www.irs.gov/Businesses/Small-...d/Partnerships

[TAXNJ]

Success rate

I am assuming you are not an attorney. I would not advise any of my clients on the issues of business entity creation other than how each of them is taxed and the general taxation rules.

I have given my clients the IRS DVD that talks about small business taxation (forget the Pub #)

Here is a link on partnerships that may be useful to you. http://www.irs.gov/Businesses/Small-...d/Partnerships

ATSMAN, that is a great idea to give the DVD rather than reems of paper or PDFs.

What do you think your success rate of your clients reading that material?

Though, I also provide same info to clients, many say are you kidding me. That's what I pay you to do for me. Then I set up an appointment to go over (great billable time) what they could read on their own but have a problem understanding the "tax" jargon. They might enjoy the video. Where did you get the DVD?
Thanks

[ATSMAN]

ATSMAN, that is a great idea to give the DVD rather than reems of paper or PDFs.

What do you think your success rate of your clients reading that material?

Though, I also provide same info to clients, many say are you kidding me. That's what I pay you to do for me. Then I set up an appointment to go over (great billable time) what they could read on their own but have a problem understanding the "tax" jargon. They might enjoy the video. Where did you get the DVD?
Thanks

The clients that I gave the DVD were young, setting up their first business venture and ready to learn something new. I did seek feedback and most of them enjoyed the CD. Not sure if they went cover to cover or just skipped but I did stress to watch the chapter on business recordkeeping.

Unfortunately IRS stopped mailing that DVD. It was called Small Business Tax Workshop CD. Now IRS has setup a video portal for all that stuff. http://www.tax.gov/SmallBusinessTaxp...irtualworkshop

[AZUKHiker]

LLC Might Be A Good Idea

The LLC might be a good idea in order to provide some legal liability protection. If they are in a community property state which recognizes same sex marriages you may be able to skip the default partnership filing status and file on just one Sch C. (assuming the husband and wife rules apply to same sex marriages).

Best advice is to refer them to an attorney for the LLC advice as they will need full and comprehensive operating agreements if they are both going to be owners of the LLC.

[Bonnie]

The only question has to do with how to be taxed. They have already decided to do an LLC. No question about that. Question is whether S corp or Partnership is better for filing taxes. I do not do many 1065 or 1120S forms so am unsure how to advise from a tax standpoint. I know for most of you this is basic and you can't imagine my not knowing but I mainly do 1040 returns and Sch C for businesses that I do handle. We are not a community property state so they cannot do Sch C with multiple member LLC

[TAXNJ]

Ttb

The only question has to do with how to be taxed. They have already decided to do an LLC. No question about that. Question is whether S corp or Partnership is better for filing taxes. I do not do many 1065 or 1120S forms so am unsure how to advise from a tax standpoint. I know for most of you this is basic and you can't imagine my not knowing but I mainly do 1040 returns and Sch C for businesses that I do handle. We are not a community property state so they cannot do Sch C with multiple member LLC

TTB a great reference in one of the sections of the advantages/disadvantages of each type entity. If beyond your scope you could consult with a tax specialist until you can get knowledgable in those areas.

[TaxGuyBill]

Will there be other people working for them?

If not, a partnership would avoid the need to file quarterly employer taxes.

If there are other employees, payroll would already be required so adding the owners to the payroll of a corporation would not be much more work or expense, while an S-corporation could reduce some self-employment taxes.