How many different businesses can one LLC have?

[Zee]

It's my understanding a single-owner LLC is treated as a Sole-Proprietor for tax purposes, and multi-owner LLC's are treated as Partnerships, or may elect to be treated as a Corporation.

I have a client that has an LLC with rental properties, a food consulting business, and a massage therapy practice. First, can three different businesses be under the umbrella one one LLC and reported on three Schedule C's?

Second (I haven't had a detailed conversation yet with the clients), I'm told the spouse operated the massage-therapy business in 2006 as part of the LLC. In 2007, a separate s-Corporation was formed for the massage-therapy business. At this point, I don't know whether the spouse operated the massage therapy business as the owner or an employee. If the spouse received no wages for operating the massage therapy business, it would seem it's her Schedule C? Is that correct? If she was paid an an employee, I suppose it could be the husband's Schedule C.

I sure could use some help with this one. I've haven't really had any dealings with LLC's other than recipient K-1's.

Thanks in advance for your help.

[jainen]

single-member LLC

A single-member LLC is a disregarded entity, so disregard it. Don't pay any attention to it at all. Do her taxes in the ordinary way -- if she has three separate businesses, then use three Schedule C's. If she incorporated, follow the regular procedures for shareholder contributions and the corporate return.

[Zee]

A single-member LLC is a disregarded entity, so disregard it. Don't pay any attention to it at all. Do her taxes in the ordinary way -- if she has three separate businesses, then use three Schedule C's. If she incorporated, follow the regular procedures for shareholder contributions and the corporate return.

I still haven't met with the taxpayers. They dropped off their last year's return. I don't have any of the LLC registration documents, etc. an 1120S was prepared last year with one shareholder included revenue/expenses for on RE rental property, and food consulting income. This suggests that a single-member LLC may elect to be treated as an S-Corporation? Is that correct?

I do have another question as well. Can different businesses under one LLC, or S-Corp have different DBA's (names). It would seem that would be very confusing to customers and not clearly identify the liability risk.

[ChEAr$]

2 and 1

A single-member LLC is a disregarded entity, so disregard it. Don't pay any attention to it at all. Do her taxes in the ordinary way -- if she has three separate businesses, then use three Schedule C's. If she incorporated, follow the regular procedures for shareholder contributions and the corporate return.

Instead of 3 schedule c's, 2 c's and an e, since one activity is rental properties.

[Bill Tubbs]

Form 8832

This suggests that a single-member LLC may elect to be treated as an S-Corporation? Is that correct?

Yes. Form 8832 "Entity Classification Election"

Bill

[Zee]

Yes. Form 8832 "Entity Classification Election"

Bill

OK. Thanks to everyone for the responses! Now, I've learned that a single-person LLC can elect to be a Sub S Corporation. In my case, there are three businesses operating under the umbrella of the LLC during 2006 which elected to be treated as an S Corporation; (1) a food-related consulting business operated by the husband, (2) a massage therapy business operated by the wife, (3) one residence rental property. To complicate things a little more, I'm told the wife formed her own S Corp for the massage therapy business in 2007.

How are the consulting business and massage therapy business both reported on the same 1120S? I understand the rental property component.

I hope these don't sound like really "dumb" questions.

[Bill Tubbs]

OK. Thanks to everyone for the responses! Now, I've learned that a single-person LLC can elect to be a Sub S Corporation. In my case, there are three businesses operating under the umbrella of the LLC during 2006 which elected to be treated as an S Corporation; (1) a food-related consulting business operated by the husband, (2) a massage therapy business operated by the wife, (3) one residence rental property. To complicate things a little more, I'm told the wife formed her own S Corp for the massage therapy business in 2007.

How are the consulting business and massage therapy business both reported on the same 1120S? I understand the rental property component.

I hope these don't sound like really "dumb" questions.

Don't worry about sounding "dumb" -- asking questions is how we all learn.

I have not done a 1120S with rental, but I do have a 1065 that is only rental -- in the case of the 1065, the first page of the return is all zeroes, the rental is on Form 8825, and the 8825 figure flows to Schedule K. I would think the same approach would work for the rental portion of the 1120S (see Schedule K, line 2, on page 2 of the 1120S).

As far as the other two businesses, my shoot-from-the-hip thought would be just to combine them and report them as 1 business -- technically, since they are both part of the same S Corp (for tax purposes anyhow) I would use 1 1120S. If they were 2 separate LLC's with the S Corp election, then I would use 2 1120S.

Bill