LLC Tax Reporting Two or more owners
Steven Palmieri, a Tax CFO and the Entrepreneur's CFO, files the partnership return when two or more owners have no accepted election, and keeps each owner's page apart from the cash.
See both pages
The company return and the owner page.
Two or more owners and no accepted election means Form 1065 in the company name and a K-1 for each owner. The page an owner receives reports that owner's share of the year's items. It does not report the cash that owner transferred to a personal account. Owners compare the page to the bank and decide the return is wrong. Often the bank is a distribution, and the page is the profit.
Capital is the other page. Money contributed, money distributed, and the running balance have to roll forward from last year to this year. We do not start a return on a capital balance nobody has tied. The rollforward follows the classification. On this default, the classification is a partnership, so the capital accounts are partnership capital accounts.
Who pays the tax.
The partnership return calculates the items and passes them to the owners. The tax on that profit is generally paid by the owners, often through estimates on the individual calendar. The four dates are 15 April, 15 June, 15 September, and 15 January of the next year, shifted to the next business day when the date falls on a weekend or a holiday. An underpayment percentage stays off this page.
A payment made from the company account can still be the owner's money for this purpose, and the books have to say so. If the payment is labeled as a company estimate against a tax the company does not owe, the voucher and the return will not meet. We look at the name on the payment before we look at the amount.
What an election would change.
An accepted S election or C election replaces this default. Until that acceptance is in the file, the report remains the partnership return. We will not prepare an S return because someone prefers the wage treatment and plans to file the election later. The election has its own window. An election generally cannot take effect more than 75 days before filing nor more than 12 months after.
After a real classification change, another election is generally barred for 60 months. Choosing the partnership default at formation, with no prior classification to leave, is not that bar. We write which of those two stories the file actually tells.
A missing owner page.
If an owner expected a page and never received one, the return may be unfiled, or the owner may have been left off the return that was filed. We look for the return and the ownership records before we draft a page from memory. A page invented to satisfy a lender is not a page we will sign onto.
Vendor forms still matter in a partnership year. Who was paid, and whether a form was collected before the payment, is a file question. We do not print a dollar threshold. The January work is the vendor file, finished before the partnership return is assembled.
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