What do you think?

[JG EA]

Question #1: Clients made an LLC (hus/wife members) with the help of an attorney. The signed the operating agreement in the middle of June. This will be an 1065.

The operating agreement date on the front is blank I presume for them to fill in.

The IRS letter with the new EIN is dated at the end of June.

The articles of organization was filed with the state in the middle of May.

The first (and only) meeting was held 07/01.

Could we start the 1065 at the beginning of the year? Or the middle of the year? Or one of these other dates?

Question #2: This is primarily the husband's business. It has been a schedule C for him so far. The wife does some books but has her own job. Could I split the percentage up? Or should it just be 50/50 (community property state) and do a guarantee wage for the husband?

[S T]

my 2 cents

When did the t/p start to operate the business??? I would use that date. So very often the Secretary of State date and the IRS date do not match, so maybe somewhere in between. I would say disregard the meeting date as those are never accurate any how.

Is the LLC a disregarded entity or did they file form 8832 to elect partnership or S Corp? That will be your clue as to how to file, Schedule C or form 1065 or 1120S. If form Sched C no guaranteed payments, if 1065 possible guaranteed payments, if 1120S needs to be W-2 payroll.

Sandy

[JG EA]

Thanks Sandy,

No they didn't elect to become an S Corp.

The client has been doing this business for years. The default according to the IRS letter (with the EIN) is a 1065. I was thinking that since this business has been the same for years and years and now is a partnership that means it always was a partnership and so maybe I could just start it back on January 1st.

I don't know - just thinking out loud.

[S T]

maybe

Well maybe you can go back to 1/1/06, but when did they indicate on the SS4 form for the changeover from Schedule C to LLC (partnership). Did they apply for new EIN #? I am thinking you have to go with that date. In past years were you filing Sched C or form 1065??

State of Washington?? Community Property, probably should have been filing form 1065 all the way along?

Sandy

[JoshinNC]

Community property state you are not required to file 1065,

non-community property it's a partnership all along. Once they formed the LLC and put down more than one member it became a 1065, community property state or not. I would use the answer to question 10 on the SS-4 (start date of business) as my start date for the 1065. They no longer have the option of filing 2 C's by splitting everything, even in community property state, because they now have a partnership registered with the IRS and their only other option is to elect corp status.

[OldJack]

>>The articles of organization was filed with the state in the middle of May<<

Officially they became an LLC on the date the state said so in May and that is the beginning of the year for the LLC. Obviously they were in business on that day as they had been in business before that day and were in business after that day. Meetings, SS-4, EIN, and Operating Agreement dates are immaterial even in a community property state as they can all be done before or after the entity exists and began doing business.