LLC filing as partnership

[Snaggletooth]

I've seen this many times (and you have too). Two guys come in and say "Duh, we're partners. We love each other and we'll be partners for life." Six months later they're ready to kill each other. The typical culprit, one of them has money, the other promises to provide most of the labor.

As often as not, these guys have had a lawyer tell them to start an LLC. That forces us to file as a partnership, S corp, or C corp. After explaining the options, the customer chooses to file as a partnership. Six months later, the partnership is over since 50% of the ownership is gone. Whadd'ya do? File a 1065 following the rules for dissolution?

To make matters worse, at this point the "partnership" is broke, and can't pay us to file anything anyway...

[ATSMAN]

Unfortunately that is a problem and if you look at the "profile" of the people who do that the way you describe it, they are the bottom of the barrel and you may not want to have them as long term clients.

Early on I learned a valuable lesson when I filed a 1065 based on a partnership agreement that was supposed to be created by an attorney but come to find out it was self created and they were NOT even partners because as you said one was suppose to contribute labor and that turned into an employer/employee relationship. I should have been more vigilant but I was new doing LLC. I lost my shirt on that situation fixing the mistakes.

[Lion]

Get out now!